Working Paper: NBER ID: w13246
Authors: Jill R. Horwitz; Austin Nichols
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: nonprofit hospitals; market ownership; medical service provision
JEL Codes: H11; I11; L13; L22; L31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| for-profit market share (D26) | nonprofit hospitals' likelihood to offer profitable services (L39) |
| for-profit market share (D26) | nonprofit hospitals' likelihood to offer unprofitable services (L39) |
| nonprofit hospitals' service offerings (L39) | nonprofit hospitals' output maximization (L39) |
| for-profit hospitals' presence (L39) | nonprofit hospitals' service provision strategies (L39) |
| market structure defined by for-profit share (D49) | nonprofit hospitals' service provision (L39) |