Krysten Crawford
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Government has been getting out of the hospital business in the United States, which begs a question: Are patients better off when private owners take over?

If they are poor and should be admitted to a hospital, the answer is likely to be “no.”

That’s according to a newly released Stanford study that delves into the rise of U.S. hospital privatization and its effects on patients. The researchers find that access to hospital beds significantly declines under private ownership — affecting all patients. But patients covered by Medicaid, the nation’s public insurance program for low-income residents, are hit the hardest by the cutbacks in available beds and other levels of care.

The study, co-authored by Mark Duggan, the Trione Director of the Stanford Institute for Economic Policy Research (SIEPR) and the Wayne and Jodi Cooperman Professor of Economics at the School of Humanities and Sciences, analyzes nearly two decades of U.S. hospital privatizations. The researchers find that a formerly government-run hospital admitted on average 15 percent fewer Medicaid patients in the years immediately following privatization. By comparison, admissions of patients covered by Medicare, the federal insurance program for the elderly, didn’t meaningfully change.

The reason why Medicaid patients are worse off when hospitals go private is clear, says Duggan, whose research focuses on health economics. “Medicaid reimbursement rates are so low that treating patients covered by the program is often unprofitable,” he says, adding that Medicare pays hospitals significantly more for care. “Many hospitals do not want to treat Medicaid patients given this financial hit.”

The implications are significant given that one in four Americans are now covered by Medicaid, Duggan says. Twenty-five years ago, only one in nine Americans got their health insurance through Medicaid.

Our study underscores how changes that are occurring in the health care system, including the widespread privatization of public hospitals, can have unintended consequences for the most vulnerable patients.
Mark Duggan, PhD
Trione Director of the Stanford Institute for Economic Policy Research (SIEPR)

“The increase in Medicaid coverage since then has been gigantic,” Duggan says. The Affordable Care Act of 2010 alone added nearly 16 million low-income patients to the program, according to government data. “Our study underscores how changes that are occurring in the health care system, including the widespread privatization of public hospitals, can have unintended consequences for the most vulnerable patients.”

According to American Hospital Association data cited in the study, public control of hospitals declined by 42 percent from 1983 to 2019 as hospitals either closed or were taken over by private interests. As of 2020, roughly 80 percent of the approximately 4,500 general acute care hospitals in the United States are controlled by private non-profit or for-profit organizations. And as the share of public hospital beds dropped, Duggan and his collaborators find that the total number of patients admitted to newly privatized hospitals — including those on Medicaid — fell by 8.5 percent.

Job losses were also notable as private owners pared costs. Duggan and his co-authors estimate that full-time hospital staff declined by 8 percent on average, with many of the cuts hitting managers, medical technicians and back-office workers. They calculate, on average, a 30 percent decrease in the number of employed physicians. Privatization did not affect nursing staffs.

Duggan says the study findings are especially important given that health care represents the largest sector of the U.S. economy at 19 percent of GDP and that hospitals employ as many workers as the entire U.S. construction industry.

“The profit motive is embedded throughout the health care system, which can be both good and bad,” Duggan says. “Good in the sense that maybe things get done more efficiently, but bad in that it can end up having adverse effects for the least profitable patients who are typically poor.”

Duggan’s co-authors are Atul Gupta, an assistant professor at The Wharton School at the University of Pennsylvania; Emilie Jackson, an assistant professor at Michigan State University; and, Zachary Templeton, a doctoral student at Wharton. Gupta, PhD ’17, and Jackson, PhD ’20, are both former SIEPR graduate student fellowship recipients.

Why go private

The researchers look at nearly 260 privatizations of hospitals run by state and local governments between 2000 and 2018. While they find that admissions overall decline at newly private hospitals, neighboring hospitals absorbed most of the displaced patients.

But that wasn’t the case for low-income patients. Not only did newly private hospitals admit fewer Medicaid patients, but so did nearby hospitals — with the steepest declines in access occurring in markets with the highest levels of poverty and concentrations of hospitals.

Duggan says Medicaid patients lose out because hospitals in high-poverty areas already are financially strapped and that introducing a new competitor in the form of a newly privatized hospital makes it that much harder for all of them to stay afloat.

“At that point, all bets are off,” says Duggan, who first analyzed hospital ownership and the role of government spending on health outcomes for low-income patients in The Quarterly Journal of Economics in 2000.

Hospitals, including neighboring ones, shed unprofitable Medicaid patients more out of necessity than avarice, Duggan says. There are multiple ways that hospitals trim their volume of Medicaid patients. For example, they might not contract with states to serve patients covered by the program or they might cut back on care that low-income patients tend to seek more than others.

Red vs blue states: A counterintuitive finding

A better understanding of the effects of hospital privatizations on patient care is critical for policymakers, whose views on the right amount of government control appear to vary widely.

According to the study, some of the country’s most conservative states have the largest share of government-owned hospital beds, while more liberal states have among the lowest. State or local governments control 44 percent of hospital beds in Alabama, for example. In Pennsylvania, they control just 4 percent.

Those stark differences defy conventional wisdom, Duggan notes. Blue (more liberal) states tend to support a bigger role for government in providing services, while red states advocate for minimal public involvement.

“You might think that government’s role in hospital care would be larger in blue states, but it turns out to be much bigger in red states,” Duggan says. “Knowing that there’s tremendous variation across states further highlights the importance of understanding the consequences of hospital privatization and figuring out what is the appropriate amount of public control.”

There’s a lot more to investigate, the researchers say.

The effects on wages for hospital staff and a close examination of types of care — like psychiatry or obstetrics — are ripe for future research, Duggan says. “If you’re a nurse in a privatized hospital, do your wages go up less than if the hospital had remained under public control?” says Duggan, who plans next to start answering some of these questions by looking closely at specific state experiences with hospital privatizations.

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As public control of U.S. hospitals has declined dramatically, Mark Duggan — director of the Stanford Institute for Economic Policy Research — shows how privatization improves profitability but reduces access for the most vulnerable patients.

Encina Hall, 616 Serra Mall, Stanford, CA 94305




Lizzy Constantz serves as the Program Manager for the Stanford Human Trafficking Data Lab. She is a graduate of the Johns Hopkins Bloomberg School of Public Health, where she studied human trafficking and human rights, culminating in a Masters thesis analyzing the correlates of early child marriage in Ethiopia. Prior to her work in public health, Lizzy developed an expertise in translation and clinical research, as well as programs and operations management. As Program Manager, she is eager to use her background and education to advance the lab's initiatives.

Program Manager

Lauren Lamson is a Research Data Analyst with Stanford’s Center for Health Policy. She has a background in development economics as well as expertise in econometrics and statistical analysis. Lauren has previously worked with Stanford's Global Center for Gender Equality, the Bill & Melinda Gates Foundation, and the University of New South Wales on research projects related to the intersection of gender and health outcomes. She holds an MSc in International & Development Economics from the University of San Francisco and a BA from The Evergreen State College. 

Research Data Analyst

Stacie B. Dusetzina, Ph.D

Associate Professor, Health Policy
Ingram Associate Professor of Cancer Research, Vanderbilt University Medical Center

Dr. Dusetzina is an associate professor in the Department of Health Policy and an Ingram associate professor of cancer research at Vanderbilt. She is a health services researcher whose work focuses on measuring and evaluating population-level use and costs of medications in the United States. Dr. Dusetzina’s work has contributed to the evidence base for the role of drug costs on patient access to care and policy changes that might improve patient access to high-priced drugs.

She has been recognized for her work at a national level, including being an invited participant for two working group meetings on “Patient Access to Affordable Cancer Drugs,” hosted by the President’s Cancer Panel, and being selected to co-author a National Academies of Sciences, Engineering and Medicine report on the same topic. Dr. Dusetzina’s research has also been broadly covered by The New York Times, NPR, Reuters, The Washington Post, STAT News, ABC News and The Wall Street Journal

In addition to her work on drug pricing, Dr. Dusetzina is a population health scientist and pharmacoepidemologist specializing in large data informatics. She has authored or co-authored more than 163 peer reviewed applied studies using Medicaid, Medicare, and commercial insurance claims data, and contributed several methods papers to the field. 

Seminar Title: Improving Access to Prescription Drugs through Policy Change

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Stacie B. Dusetzina Associate Professor, Health Policy Vanderbilt University

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Oshra’s experience in medical research extends back to her graduate and postgraduate studies in the fields of clinical neurophysiology, cardiology and pulmonary hypertension. She joined Stanford in 2012 as a postdoctoral scholar and transitioned to managing clinical research at Stanford School of Medicine thereafter. Prior to joining Health Policy Department, Oshra worked with several other departments at Stanford, specifically the Reproductive and Endocrinology Clinic at the Obstetric and Gynecology Department and the Women’s Breast Cancer research group at the Cancer Clinical Trials Office. At Health Policy, Oshra is providing oversight for logistics, regulatory, data quality operations and progress tracking of the EPOCH study, a multi-departmental clinical research program aiming to understand the long term effects of pre-eclampsia on women’s heart health. 

Study Manager, EPOCH

Research in Progress

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Professor of Medicine (Infectious Diseases)
Senior Fellow, Freeman Spogli Institute for International Studies
Senior Fellow, Woods Institute for the Environment
Professor of Epidemiology & Population Health (by courtesy(

Prof. Stephen Luby studied philosophy and earned a Bachelor of Arts summa cum laude from Creighton University. He then earned his medical degree from the University of Texas Southwestern Medical School at Dallas and completed his residency in internal medicine at the University of Rochester-Strong Memorial Hospital. He studied epidemiology and preventive medicine at the Centers for Disease Control and Prevention.

Prof. Luby's former positions include leading the Epidemiology Unit of the Community Health Sciences Department at the Aga Khan University in Karachi, Pakistan, for five years and working as a Medical Epidemiologist in the Foodborne and Diarrheal Diseases Branch of the U.S. Centers for Disease Control and Prevention (CDC) exploring causes and prevention of diarrheal disease in settings where diarrhea is a leading cause of childhood death.  Immediately prior to joining the Stanford faculty, Prof. Luby served for eight years at the International Centre for Diarrhoeal Diseases Research, Bangladesh (icddr,b), where he directed the Centre for Communicable Diseases. He was also the Country Director for CDC in Bangladesh.

During his over 25 years of public health work in low-income countries, Prof. Luby frequently encountered political and governance difficulties undermining efforts to improve public health. His work within the Center on Democracy, Development, and the Rule of Law (CDDRL) connects him with a community of scholars who provide ideas and approaches to understand and address these critical barriers.


Director of Research, Stanford Center for Innovation in Global Health
Affiliated faculty at the Center on Democracy, Development and the Rule of Law
Stanford Affiliate, Stanford Center on China's Economy and Institutions

Encina Commons,
615 Crothers Way Room 182,
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Assistant Professor, Health Policy

Maria Polyakova, PhD, is an Assistant Professor of Health Policy at the Stanford University School of Medicine. Her research investigates questions surrounding the role of government in the design and financing of health insurance systems. She is especially interested in the relationships between public policies and individuals’ decision-making in health care and health insurance, as well as in the risk protection and re-distributive aspects of health insurance systems. She received a BA degree in Economics and Mathematics from Yale University, and a PhD in Economics from MIT.

Encina Commons, Room 220
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Professor, Health Policy

Jeremy Goldhaber-Fiebert, PhD, is a Professor of Health Policy, a Core Faculty Member at the Center for Health Policy and the Department of Health Policy, and a Faculty Affiliate of the Stanford Center on Longevity and Stanford Center for International Development. His research focuses on complex policy decisions surrounding the prevention and management of increasingly common, chronic diseases and the life course impact of exposure to their risk factors. In the context of both developing and developed countries including the US, India, China, and South Africa, he has examined chronic conditions including type 2 diabetes and cardiovascular diseases, human papillomavirus and cervical cancer, tuberculosis, and hepatitis C and on risk factors including smoking, physical activity, obesity, malnutrition, and other diseases themselves. He combines simulation modeling methods and cost-effectiveness analyses with econometric approaches and behavioral economic studies to address these issues. Dr. Goldhaber-Fiebert graduated magna cum laude from Harvard College in 1997, with an A.B. in the History and Literature of America. After working as a software engineer and consultant, he conducted a year-long public health research program in Costa Rica with his wife in 2001. Winner of the Lee B. Lusted Prize for Outstanding Student Research from the Society for Medical Decision Making in 2006 and in 2008, he completed his PhD in Health Policy concentrating in Decision Science at Harvard University in 2008. He was elected as a Trustee of the Society for Medical Decision Making in 2011.

Past and current research topics:

  1. Type 2 diabetes and cardiovascular risk factors: Randomized and observational studies in Costa Rica examining the impact of community-based lifestyle interventions and the relationship of gender, risk factors, and care utilization.
  2. Cervical cancer: Model-based cost-effectiveness analyses and costing methods studies that examine policy issues relating to cervical cancer screening and human papillomavirus vaccination in countries including the United States, Brazil, India, Kenya, Peru, South Africa, Tanzania, and Thailand.
  3. Measles, haemophilus influenzae type b, and other childhood infectious diseases: Longitudinal regression analyses of country-level data from middle and upper income countries that examine the link between vaccination, sustained reductions in mortality, and evidence of herd immunity.
  4. Patient adherence: Studies in both developing and developed countries of the costs and effectiveness of measures to increase successful adherence. Adherence to cervical cancer screening as well as to disease management programs targeting depression and obesity is examined from both a decision-analytic and a behavioral economics perspective.
  5. Simulation modeling methods: Research examining model calibration and validation, the appropriate representation of uncertainty in projected outcomes, the use of models to examine plausible counterfactuals at the biological and epidemiological level, and the reflection of population and spatial heterogeneity.

Encina Commons Room 180,
615 Crothers Way,
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Professor Pediatrics (General Pediatrics)
Professor, Health Policy
Bowei Lee Professor

C. Jason Wang, M.D., Ph.D. is a Professor of Pediatrics and Health Policy and director of the Center for Policy, Outcomes, and Prevention at Stanford University.  He received his B.S. from MIT, M.D. from Harvard, and Ph.D. in policy analysis from RAND.  After completing his pediatric residency training at UCSF, he worked in Greater China with McKinsey and Company, during which time he performed multiple studies in the Asian healthcare market. In 2000, he was recruited to serve as the project manager for the Taskforce on Reforming Taiwan's National Health Insurance System. His fellowship training in health services research included the Robert Wood Johnson Clinical Scholars Program and the National Research Service Award Fellowship at UCLA. Prior to coming to Stanford in 2011, he was an Assistant Professor of Pediatrics and Public Health (2006-2010) and Associate Professor (2010-2011) at Boston University and Boston Medical Center. 

Among his accomplishments, he was selected as the student speaker for Harvard Medical School Commencement (1996).  He received the Overseas Chinese Outstanding Achievement Medal (1996), the Robert Wood Johnson Physician Faculty Scholars Career Development Award (2007), the CIMIT Young Clinician Research Award for Transformative Innovation in Healthcare Research (2010), and the NIH Director’s New Innovator Award (2011). He was recently named a “Viewpoints” editor and a regular contributor for the Journal of the American Medical Association (JAMA).  He served as an external reviewer for the 2011 IOM Report “Child and Adolescent Health and Health Care Quality: Measuring What Matters” and as a reviewer for AHRQ study sections.

Dr. Wang has written two bestselling Chinese books published in Taiwan and co-authored an English book “Analysis of Healthcare Interventions that Change Patient Trajectories”.  His essay, "Time is Ripe for Increased U.S.-China Cooperation in Health," was selected as the first-place American essay in the 2003 A. Doak Barnett Memorial Essay Contest sponsored by the National Committee on United States-China Relations.

Currently he is the principal investigator on a number of quality improvement and quality assessment projects funded by the Robert Wood Johnson Foundation, the National Institutes of Health (USA), Health Resources and Services Administration (HRSA), and the Andrew T. Huang Medical Education Promotion Fund (Taiwan).

Dr. Wang’s research interests include: 1) developing tools for assessing and improving the quality of healthcare; 2) facilitating the use of innovative consumer technology in improving quality of care and health outcomes; 3) studying competency-based medical education curriculum, and 4) improving health systems performance.

Director, Center for Policy, Outcomes & Prevention (CPOP)
Co-Director, PCHA-UHA Research & Learning Collaborative
Co-Chair, Mobile Health & Other Technologies, Stanford Center for Population Health Sciences
Co-Director, Academic General Pediatrics Fellowship
PhD Student, Health Policy

Jlateh Vincent Jappah is a PhD student in Health Policy (Health Economics) at Stanford School of Medicine and Stanford Freeman Spogli Institute for International Studies. His research interests intersect between methods that enhance access to the social determinants of health and the provision of appropriate and timely healthcare services, with the aim of reducing avoidable morbidity and mortality and improving overall health and well-being, especially for underserved and vulnerable populations. 

Jlateh contends that although health insurance and access to healthcare services are important elements in the health production function, other structural and socio-economic factors collude to either foster or erode health. As such, he has a keen interest in public policy, economics, medicine, global public health, maternal and child health, and a curiosity to understand those socio-political and institutional forces that shape health and well-being. He is also interested in machine learning and artificial intelligence in healthcare.

In addition to the United States, Jlateh has lived and worked in several countries in Africa, Asia, and Europe. He is bi-lingual (English and Russian).

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