Effect of the Patient Protection and Affordable Care Act on for-profit hospitals in the USA
Purpose: This study aims to examine the effect of the Patient Protection and Affordable Care Act (PPACA) on for-profit hospitals in the USA. Design/methodology/approach: The study uses the event study methodology to examine the stock market’s reaction to the passage of the PPACA. Findings: The results of the analysis do not show a negative effect; on the contrary, the stock prices of for-profit hospitals increased, on average, by 6%. The cumulative abnormal returns were 5.64% with a generalized z-value of 3.851 with a significance level of 0.001 (two-tailed test). This translates into an average gain of $230,537,096 for the four days (dates) that a positive step was taken in making the Affordable Care Act (ACA) a law of the country. Practical implications: Because the study suggests that for-profit hospitals will be profitable under the PPACA, one could expect to see growth or, at the minimum, expansion in for-profit hospitals under the Act. Furthermore, and consistent with the principles of marketing, one would expect all the for-profit hospitals, at this nascent stage of the ACA, to pull resources together to promote the benefits of having the ACA. Originality/value: To the best of the author’s knowledge, this is the first study to examine the effect of the PPACA on the operations of for-profit hospitals.
Year of publication: |
2020
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Authors: | Koku, Paul Sergius |
Published in: |
International Journal of Pharmaceutical and Healthcare Marketing. - Emerald, ISSN 1750-6123, ZDB-ID 2280280-0. - Vol. 14.2020, 2 (01.04.), p. 201-215
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Publisher: |
Emerald |
Saved in:
Online Resource
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