Modeling Internal Decision Making Process: An Explanation of Conflicting Empirical Results on Behavior of Non‐Profit and For‐Profit Hospitals
Kathleen A. Carroll
University of Maryland, Baltimore County (UMBC) - Department of Economics
Jane E. Ruseski
West Virginia University
Contemporary Economic Policy, Vol. 29, Issue 4, pp. 510-523, 2011
This article develops multiobjective models of hospital decision making that incorporate the internal decision process in both a for‐profit and a non‐profit hospital (NPH). Predicted output and quality for an NPH differ from those for a for‐profit hospital under some conditions but converge under others. Convergence may be the result of a complex internal decision structure with decision control primarily by physicians, similar objectives across different organizational forms, or differing constraints. The mechanisms underlying these outcomes provide explanations for conflicting results in empirical studies of non‐profit and for‐profit hospitals and provide a different rationale for convergence than non‐profit response to competition from for‐profit hospitals. Understanding the source of convergence is important for policies directed toward the tax treatment of NPHs.
Number of Pages in PDF File: 14
JEL Classification: D21, D23, I11, L3, L21
Date posted: September 21, 2011
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