Abstract: We uncover persistent variation in Medicare billing intensity that is not explained by sicker patients, patient selection, or coding completeness, but by systematic upcoding of specific comorbidities absent in the immediately preceding hospital stay. Substantial cross-sectional variation in upcoding is largely unrelated to factors emphasized in the literature such as billing regimes, enforcement, and competition. Upcoding appears driven by firm-wide practices that spread across facilities within skilled nursing facility (SNF) firms and through rapid acquisitions. For-profit and private equity firms have higher upcoding on average, but wide differences across firms of all ownership types underscore the importance of firm-level ethos.
Discussant: Abhinav Gupta, University of North Carolina-Chapel Hill
Giorgo Sertsios, University of Wisconsin-Milwaukee
Jiadi Xu, University of Wisconsin-Milwaukee
Abstract: U.S. hospitals are expected to provide charity care—services delivered at below-cost prices—though the strength of this commitment and their funding sources vary across organizational forms. We study how the different forms respond to persistent increases in local demand for uncompensated care induced by immigration flows. Using historical immigrant enclaves to instrument for local immigration, we find that a 1% increase in immigration (relative to a county’s initial population) leads to a 2.17% decline in hospital bed capacity over ten years, driven primarily by nonprofit exits through closures or mergers. Surviving nonprofits experience declining profit margins and rising uncompensated care; they respond by reducing capital investments rather than raising external funds. Government hospitals absorb comparable operating losses yet avoid exit and expand market shares while for-profit hospitals remain largely unaffected. Our findings suggest that nonprofit hospitals face tight financing and operating constraints that limit their ability to absorb profitability shocks and sustain mission-driven commitments. More broadly, the results highlight how sustained increases in demand for charitable services reshape capital allocation and ownership structure in the healthcare sector.
Abstract: We develop a measure of managers’ negotiation skill based on their vehicle purchase price and connect it to observed negotiated prices in business-to-business contracting. Using proprietary data on insurance claims between hospitals and private insurers, we find that hospital managers with higher negotiation skill achieve better outcomes, both for the average price per service and for identical procedures at the same hospital. Evidence from both management turnovers for natural causes as well as shocks to insurer bargaining position supports a causal interpretation. Lastly, we structurally estimate a model to quantify the impact of managers’ personal negotiation skill on hospital bargaining power. Counterfactual simulations imply that heterogeneity in managers’ negotiation skills accounts for over 28% of the price dispersion explained by variation in hospitals’ bargaining power.
Discussant: Richard Thakor, University of Minnesota
