"The Business of Healthcare Innovation is a wide-ranging analysis of business trends in the manufacturing segment of the healthcare industry. It provides a thorough overview and introduction to the innovative sectors fueling improvements in healthcare: pharmaceuticals, biotechnology, platform...

This is a copy of an article published in the Population Health Management © 2011 Copyright Mary Ann Liebert, Inc.; Population Health Management is available online at: http://www.liebertonline.com. DOI: 10.1089/pop.2010.0021.

Cross-subsidies are often considered the principal mechanism through which hospitals provide unprofitable care. Yet, hospitals' reliance on and extent of cross-subsidization are difficult to establish. We exploit entry by cardiac specialty hospitals as an exogenous shock to incumbent hospitals'...