Given an increasingly complex web of financial pressures on providers, studies have examined how hospitals’ overall financial health affects different aspects of hospital operations. In our study, the authors develop an empirical proxy for the concept of soft budget constraint as an alternative financialmeasure of a hospital’s overall financial health and offer an initial estimate of the effect of SBCs on hospital access and quality. An organization has a SBC if it can expect to be bailed out rather than shut down. Their conceptual model predicts that hospitals facing softer budget constraints will be associated with less aggressive cost control, and their quality may be better or worse, depending on the scope for damage to quality from noncontractible aspects of cost control. They find that hospitals with softer budget constraints are less likely to shut down safety net services. In addition, hospitals with softer budget constraints appear to have better mortality outcomes for elderly heart attack patients. (Author/publisher)
Abstract