Journal of Productivity Analysis

, Volume 29, Issue 1, pp 61–75 | Cite as

Expense preference behavior and management “outsourcing”: a comparison of adopters and non-adopters of contract management in U.S. hospitals



Specialized managerial expertise, coupled with the threat of non-renewal should improve efficiency in firms that opt for contract management arrangements. To examine this we apply a generalized version of tests for expense preference behavior to U.S. hospitals in the 1990s. Extending prior literature, we create a quasi-experimental design for a comparison of adopters and non-adopters of contracts using propensity score methods. We generate the distribution of ‘expense preference’ parameters for all contract adopters in both the pre- and post-adoption states, and for a matched control group of non-adopters over the same period. Our results show that contract adoption leads to reduced expense preference behavior, but that this result depends critically on the input being examined.


Expense preference Hospitals Contract management 

JEL Classifications

D24 L24 


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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Boston University School of Public HealthBostonUSA
  2. 2.VA Center for Health Quality, Outcomes and Economic ResearchBedfordUSA
  3. 3.George Washington UniversityWashington DCUSA
  4. 4.NBERCambridgeUSA

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