What Do Nonprofit Hospitals Maximize? Medical Service Provision and Market Ownership Mix

76 Pages Posted: 1 Aug 2007 Last revised: 25 Jun 2008

Jill R. Horwitz

UCLA School of Law; National Bureau of Economic Research (NBER)

Austin Nichols

The Urban Institute

Date Written: June 1, 2008

Abstract

Conflicting theories of the nonprofit firm have existed for several decades yet empirical research has not resolved these debates, partly because the theories are not easily testable but also because empirical research generally considers organizations in isolation rather than in markets. Here we examine three types of hospitals - nonprofit, for-profit, and government - and their spillover effects. We look at the effect of for-profit ownership share within markets in two ways, on the provision of medical services and on operating margins at the three types of hospitals. We find that nonprofit hospitals' medical service provision systematically varies by market mix. We find no significant effect of for-profit market share on the operating margins of nonprofit hospitals. These results fit best with theories in which hospitals maximize their own output.

Keywords: medical service provision, nonprofit firm

JEL Classification: I1, L1, L3, L22, H1

Suggested Citation

Horwitz, Jill R. and Nichols, Austin, What Do Nonprofit Hospitals Maximize? Medical Service Provision and Market Ownership Mix (June 1, 2008). U of Michigan Law & Economics, Olin Working Paper No. 07-014; NBER Working Paper No. 13246. Available at SSRN: https://ssrn.com/abstract=1002687 or http://dx.doi.org/10.2139/ssrn.1002687

Jill R. Horwitz (Contact Author)

UCLA School of Law ( email )

Box 951476
Los Angeles, CA 90095-1476
United States
310-206-1577 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Austin Nichols

The Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
United States

Paper statistics

Downloads
4
Abstract Views
123