Industrial Organization of Medical Care.

• Position: NBER conference

As part of its ongoing research on health care, the NBER held a Conference on the Industrial Organization of Medical Care in Nashville, Tennessee, on April 26-29. David, M. Cutler, NBER and Harvard University, organized the program, which included site visits to health care organizations and facilities in the Nashville area as well as discussion of the following papers:

Richard Arnould and Kevin F. Hallock, University of Illinois; and Marianne Bertrand, NBER and Princeton University; "Does Market Competition Change the Nonprofit Mission? Managed Care and the Managerial Labor, Market in Nonprofit Hospitals"

Discussant: Nancy Beaulieu, Harvard University

David M. Cutler and Janice Seinfeld, Harvard University "Managerial Background and Decisionmaking: Evidence from the Hospital Industry"

Discussant: Douglas O. Staiger, NBER and Dartmouth College

Susan C. Athey and Scott Stern, NBER and MIT, "The Impact of Information Technology and Job Design on Emergency Health Care Outcomes"

Discussant: Iain Cockburn, NBER and Boston University

William M. Gentry, NBER and Columbia University, "Endowment Assets, Tax-Exempt Debt and the Capital Structure of Not-for-Profit Hospitals"

Discussant: Frank A. Sloan, NBER and Duke University

Frank R. Lichtenberg, NBER and Columbia University, and Tomas J. Philipson, NBER and University of Chicago, "Creative versus Uncreative Destruction: An Empirical Examination of the U.S. Pharmaceuticals Market"

Discussant: Ariel S. Pakes, NBER and Harvard University

Kevn A. Hassett, American Enterprise Institute, and R. Glenn Hubbard, NBER and Columbia University, "Noncontractable Quality and Organization Form in the U.S. Hospital Industry"

Discussant: Edward L. Glaeser, NBER and Harvard University

Janet Currie, NBER and University of California,, Los Angeles, and John Fahr, University of California, Los Angeles, "Managed Care and Hospital Provision of Charity Care: The Case of California"

Discussant: Helen Levy, University of Chicago

Jeanette Chung, University of Chicago, and David Meltzer, NBER and University of Chicago, "Effects of Competition under Prospective Payment on Hospital Costs among High and Low Cost Admissions: Evidence from California, 1983-93"

Discussant: Mark B. McClellan, NBER and Stanford University

Daniel P. Kessler and Mark B. McClellan, NBER and Stanford University, "The Effects of Hospital Ownership on Medical Productivity"

Discussant: Elizabeth Richardson Vigdor, Duke University,

Jason R. Barro, NBER and Harvard University, "Efficiency and Monopoly as Explanations for Hospital Mergers"

Discussant: Catherine D. Wolfram, NBER and Harvard University

Elaine Silverman, Veterans Administration Medical Center, and

Jonathan Skinner, NBER and Dartmouth College, "Are For-Profit Hospitals Really Different? Medicare 'Upcoding' and Market Structure"

Discussants: Louise Sheiner, Federal Reserve Board of Governors

Laurence C. Baker, NBER and Stanford University, and Ciaran S. Phibbs, Stanford University, "Managed Care, Technology Adoption, and Health Care: The Adoption of Neonatal Intensive Care"

Discussant: Michael Chernew, University of Michigan

Mark G. Duggan, NBER and University of Chicago, "Hospital Market Structure and Medical Care for the Poor"

Discussant: Douglas O. Staiger

Arnould, Bertrand, and Hallock examine the effect of the competitive pressures introduced by health maintenance organization (HMO) penetration on the labor market for managers in not-for-profit hospitals. Using data on about 1,500 nonprofit hospitals from 1992-6, they find that top executive turnover rises after an increase in HMO penetration. Moreover, the increase in turnover is concentrated among the hospitals that have low levels of economic profitability and are highly leveraged financially. While the link between top executive pay and for-profit performance measures is very weak on average, it tightens with increasing HMO penetration: as HMO penetration increases, top executives are compensated more for improving the profitability of their hospitals. These results are consistent with the view that HMO penetration increases the importance of for-profit performance objectives among not-for-profit hospitals. Boards appoint new managers that are better able to compete in the new market environment and they reward incumbent managers for achieving for-profit goals. However there is no evidence that not-for-profit boards...