Effects of regulation and competition on health care disparities: the case of cardiac angiography in New Jersey

Abstract

This article evaluates a Certificate of Need (CON) reform in New Jersey that was designed to expand hospital capacity to provide cardiac angiography (CA) and reduce long-standing disparities in access to the procedure. Using data from 1995 to 2004, we find that expanded capacity increased CA utilization overall and did so more rapidly for blacks, leading to a large reduction in the disparity. However, this reduction was not attributable to services provided by new entrants to the CA market, since they were located in mostly white suburban areas. Instead, the new entrants cut into the incumbents' share of white CA patients who had previously traveled from the suburbs to receive the procedure at inner-city incumbent hospitals. As a result, it appears that incumbents were forced to serve more black patients in their local area to maintain their CA volume. These findings suggest that prior restrictions on CA capacity contributed to the historical disparity in access to the procedure.