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Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care?

University of Chicago George J. Stigler Center for the Study of the Economy and the State Working Paper No. 232

59 Pages Posted: 22 Apr 2010  

Cory S. Capps

Bates White, LLC

Guy David

University of Pennsylvania - Health Care Systems Department

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2010

Abstract

Nonprofit hospitals receive favorable tax treatment in exchange for providing socially beneficial activities. Extending this rationale suggests that nonprofit hospital mergers should be evaluated differently than mergers of for-profit hospitals because suppression of competition may also allow nonprofits to cross-subsidize care for the poor. Using detailed California data, we find no evidence that nonprofit hospitals are more likely than for-profit hospitals to provide more charity care or offer unprofitable services in response to an increase in market power. Therefore, we find no empirical justification for different antitrust standards for nonprofit hospitals, as some courts have suggested.

Suggested Citation

Capps, Cory S. and David, Guy and Carlton , Dennis W., Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care? (April 1, 2010). University of Chicago George J. Stigler Center for the Study of the Economy and the State Working Paper No. 232. Available at SSRN: https://ssrn.com/abstract=1594249 or http://dx.doi.org/10.2139/ssrn.1594249

Cory S. Capps

Bates White, LLC ( email )

2001 K St., NW
Suite 700
Washington, DC 20006
United States
202.216.1151 (Phone)
202.408.7838 (Fax)

Guy David

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
Colonial Penn Center
Philadelphia, PA 19104-6358
United States

HOME PAGE: http://www.wharton.upenn.edu/faculty/david.html

Dennis W. Carlton (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
312-322-0215 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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