Do Religious Nonprofit and For-Profit Organizations Respond Differently to Financial Incentives? The Hospice Industry

Journal of Health Economics, Vol. 26, pp. 342-357, 2007

16 Pages Posted: 1 May 2011

See all articles by Burton A. Weisbrod

Burton A. Weisbrod

Northwestern University - Department of Economics; University of California, San Diego (UCSD) - Department of Economics

Richard C. Lindrooth

Medical University of South Carolina

Date Written: 2007

Abstract

We study how for-profit and religious nonprofit hospices respond to an exogenous Medicare reimbursement incentive that encourages maximization of patient length of stay. Hospices have the incentive to selectively admit patients with longer expected lengths of stay, and admit patients sooner after a hospital discharge. We find that for-profit hospices are significantly less likely to admit patients with shorter, less profitable, expected lengths of stay. We do not find any difference in the timing of admission by ownership. Incentives for efficiency could be strengthened by a Medicare pricing system that replaced the current flat per diem payment with one that reflected the high costs at the beginning and end of hospice stay and the lower costs in between.

Keywords: nonprofit, hospices, medicare

JEL Classification: L33, L31,

Suggested Citation

Weisbrod, Burton A. and Lindrooth, Richard C., Do Religious Nonprofit and For-Profit Organizations Respond Differently to Financial Incentives? The Hospice Industry (2007). Journal of Health Economics, Vol. 26, pp. 342-357, 2007, Available at SSRN: https://ssrn.com/abstract=1826143

Burton A. Weisbrod (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States
847-467-1235 (Phone)
847-491-7001 (Fax)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

Richard C. Lindrooth

Medical University of South Carolina ( email )

19 Hagood Ave., Suite 401
Charleston, SC 29425
United States

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