Quality of care, asymmetric information, and patient outcomes in U.S. for-profit and not-for-profit renal dialysis facilities

Abstract

Economic theory suggests that investor-owned firms exhibit superior performance compared to their not-for-profit competitors due to efficiency gains realized from profit maximization incentives. Others argue that ownership type matters less than the incentives provided by the market in which the facilities operate. This dissertation examines the role of quality in comparative studies of sector performance in the health care industry. Quality variation is then analyzed with a cross-sectional study of almost 200,000 patients receiving renal dialysis treatments at over 2000 dialysis facilities nationwide. Multivariate regression analysis and propensity score analysis revealed higher patient mortality rates among patients treated at for-profit facilities, after adjusting for patient case-mix and market characteristics. Evidence of quality variation across ownership types suggests that researchers studying comparative efficiency of for-profit and not-for-profit health care firms must control for differing patient outcomes. Further testing was performed on a data sub-sample that included variables serving as proxies for patient knowledge. Dialysis facilities were found to treat high-knowledge patients differently than low-knowledge patients, but for-profit firms were not always found to exploit asymmetries of information more than their not-for-profit counterparts.