Regulation and the optimal size and type of abortion provider.

PIP: This paper examines the changes in the size distribution of firms in the abortion services market between 1978 and 1992 in the US. The results indicate that for the entire 15-year period, the market shares of large abortion providers were increasing in both restrictive and nonrestrictive states. Also clinics and physician offices appear to be gaining market share relative to hospitals. These increasing market shares could be due to many factors, such as changes in the technology of providing abortions on an outpatient basis and changes in the relative prices of abortions in hospitals and abortions in non-hospital settings. Furthermore, this paper includes an analysis of the impact of state-level Medicaid funding regulations on the number, size, and type of abortion provider. These results have important implications for women's access to abortion services and for infant and maternal health.^ieng

Change, consolidation, and competition in health care markets.

The health care industry is being transformed. Large firms are merging and acquiring other firms. Alliances and contractual relations between players in this market are shifting rapidly. Within the next few years, many markets are predicted to be dominated by a few large firms. Antitrust enforcement authorities like the Department of Justice and the Federal Trade Commission, as well as courts and legislators at both the federal and state levels, are struggling with the implications of these changes for the nature and consequences of competition in health care markets. In this paper we summarize the nature of the changes in the structure of the health care industry. We focus on the markets for health insurance, hospital services, and physician services. We then discuss the potential implications of the restructuring of the health care industry for competition, efficiency, and public policy. As will become apparent, this area offers a number of intriguing questions for inquisitive researchers.

Increasing consolidation in healthcare markets: what are the antitrust policy implications?

OBJECTIVE: To discuss the implications of the rapid transformation of the healthcare financing and delivery system for competition, social welfare, and antitrust policy. PRINCIPAL FINDING: Horizontal and vertical consolidations can enhance efficiency but can also be anticompetitive in markets characterized by entry barriers. RECOMMENDATION: Active enforcement of the antitrust laws is essential to ensure that competition in healthcare markets will lead to procompetitive, rather than anticompetitive effects. However, healthcare antitrust enforcement policy must be flexible enough to allow efficient new forms of organization and practice to emerge.

Women's reproductive choices: the impact of Medicaid funding restrictions.

As of January 1997, 34 states were enforcing restrictions on Medicaid funding for abortions. Determining whether these restrictions affect women's reproductive decisions was the object of a fixed-effects log-linear analysis using 11 years of data between 1978 and 1992. Results indicate that abortion rates in states with Medicaid funding restrictions are 2% lower than rates in states with no such restrictions. However, when the supply of abortion providers and the demographic characteristics of the state population are taken into account, the difference is no longer statistically significant. Medicaid funding restrictions have no impact on birthrates, and the result is the same regardless of whether the empirical model takes into account provider availability, demographic characteristics and state sentiment toward women and reproductive rights.

The economic impact of state restrictions on abortion: parental consent and notification laws and Medicaid funding restrictions.

PIP: State-legislative support for liberalized abortion policies, the availability of abortion providers, and actual abortion rates vary widely across states. This article uses national data to examine the impact of the following three major, enforceable state abortion restrictions as of 1988 on the access to and use of abortion services: state restrictions on Medicaid financing of abortions for low-income women (36 states), state requirements for parental consent or parental notification for minors to obtain abortions (11 states), and state restrictions on insurance coverage of abortion for public employees (8 states). The impact of state abortion restrictions is becoming an increasingly important policy issue as the number and types of restrictions which can be enforced in the US increase rapidly. The Supreme Court in Webster v. Reproductive Health Services (1989) upheld a Missouri law banning abortions in public hospitals and the involvement of public employees in the performance of abortions; states via this ruling may also enforce mandatory testing for viability after a specified point in the pregnancy. The Supreme Court then in Planned Parenthood of Southeastern Pennsylvania v. Casey (1992) effectively ruled that states can enforce a 24-hour waiting period and a state-prescribed talk on abortion for women seeking abortion. Analysis of the data found that there are significantly fewer hospitals, clinics, and private physicians' offices providing abortions in states with parental consent or notification laws. Moreover the rate of minors' abortions per 1000 teen pregnancies is 16% lower, and the rate of minors' abortions per 1000 women aged 15-19 is 25% lower in states with such laws compared to states without the laws. Data from abortion clinics and referral services in Massachusetts, Minnesota, and Rhode Island suggest that 20-55% of minors are going to court instead of informing their parents. 35% of minors who contacted a clinic in Massachusetts and 49% in Rhode Island went out of state for abortions. As for Medicaid restrictions, there are significantly fewer hospitals, clinics, and private physicians' offices providing abortions in states which restrict funding of abortions as compared to states which do not. State restrictions on insurance coverage of abortion for public employees do not appear to be associated with statistically significant differences in abortion rates or abortion availability.^ieng

The impact of vendorship legislation and interprofessional competition in the market for social workers' services.

The results of this article suggest that, in the short run, vendorship legislation will not result in a large shift of social workers from organized settings into private practice. However, vendorship legislation appears to increase the number of social workers in private practice in areas that have not attracted as many psychiatrists. Thus, vendorship may have a favorable impact on the geographic distribution of mental health providers. Vendorship legislation may result in increases in private practice social workers in underserved areas. The results also suggest that social workers and psychiatrists compete in the market for mental health services. In counties with higher psychiatrist-to-population ratios, fees for social workers' services are lower. Further, in counties with higher psychiatrist-to-population ratios, the number of social workers in private practice decreased after vendorship. Finally, there is a large range of optimal practice size for social workers. Social workers with 20 or more clients per month can provide mental health services at the lowest average cost per client. Thus social workers operating either full-time or part-time practices with more than 20 clients per month can provide mental health services efficiently.

Consumer information and providers' reputations. An empirical test in the market for psychotherapy.

This paper estimates the price effects of provider-specific reputations measured as the percent of each provider's clients who are referred by 'informed community sources', such as other health professionals, school counselors, businesses, clergy, and attorneys. Using data on the prices of outpatient psychotherapy visits to private-practice social workers in Massachusetts, the results suggest that social workers with established reputations for high-quality care charge higher prices. In addition, the results suggest that intra- and inter-professional competition can constrain the pricing decisions of psychotherapists, and that increasing consumer information increases the effectiveness of this competition.

Quality and provider choice: a multinomial logit-least-squares model with selectivity.

A Federal Trade Commission survey of contact lens wearers is used to estimate a multinomial logit-least-squares model of the joint determination of provider choice and quality of care in the contact lens industry. The effect of personal and industry characteristics on a consumer's choice among three types of providers--opticians, ophthalmologists, and optometrists--is estimated via multinomial logit. The regression model of the quality of care has two features that distinguish it from previous work in the area. First, it uses an outcome rather than a structural or process measure of quality. Quality is measured as an index of the presence of seven potentially pathological eye conditions caused by poorly fitted lenses. Second, the model controls for possible selection bias that may arise from the fact that the sample observations on quality are generated by consumers' nonrandom choices of providers. The multinomial logit estimates of provider choice indicate that professional regulations limiting the commercial practices of optometrists shift demand for contact lens services away from optometrists toward ophthalmologists. Further, consumers are more likely to have their lenses fitted by opticians in states that require the licensing of opticians. The regression analysis of variations in quality across provider types shows a strong positive selection bias in the estimate of the quality of care received by consumers of ophthalmologists' services. Failure to control for this selection bias results in an overestimate of the quality of care provided by ophthalmologists.

Strategic regulatory entry deterrence: an empirical test in the ophthalmic market.

This paper provides an empirical test of the theory of strategic regulatory entry deterrence--the theory that subgroups of firms within an industry will use the regulatory process to increase rivals' costs and thereby deter rivals' entry. The results suggest that the commercial practice restrictions present in the ophthalmic industry deterred chain optical firms' entry into the market. This result in combination with earlier findings that the restrictions increase optometrists' prices suggests that cost-raising strategies can be used to disadvantage rivals or drive them out of the market without the need to lower price.

Employment choices and earnings of social workers: comparing private practice and salaried employment.

Direct recognition statutes, such as freedom of choice and vendorship laws, have the potential to increase the number of independent providers of psychotherapy, and thus to increase competition in the market for psychotherapy. These laws increase the economic return to private practice by requiring that third-party payers directly reimburse psychologists and social workers. There has been, however, little empirical investigation of the responsiveness of psychotherapists' employment choices to changes in the economic return to private practice. In this study, a structural model of social workers' earnings and employment choices between private practice and salaried employment is estimated. After correcting for the potential self selection bias, the results suggest that increasing the relative return to private practice does not increase the probability that a social worker will enter private practice.