Working Paper: NBER ID: w2753
Authors: Richard C. Frank; David S. Salkever
Abstract: This paper extends previous research on Individuals' supply of charitable donations to the behavior of nonprofit firms. Specifically, we study provision of charity care by private, nonprofit hospitals. We demonstrate that In the absence of large positive income effects on charity care supply, convex preferences for the nonprofit hospital imply crowding out by other private or government hospitals. Extending our model to include patient heterogeneity and impure altruism (rivalry) provides a possible explanation for the previously reported empirical result that both crowding out and income effects on indigent care supply are often weak or insignificant. Empirical analysis of data for hospitals in Maryland provides strong evidence of rivalry on the supply of outpatient plus inpatient charity care, but not when the analysis is confined to inpatient care.
Keywords: Nonprofit hospitals; Charity care; Crowding out; Rivalry; Altruism
JEL Codes: I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Charity care supply by one hospital (D64) | Charity care supply by another hospital (I19) |
| Rivalry among nonprofit hospitals (L39) | Charity care provision (D64) |
| Presence of other voluntary hospitals in a county (I19) | Charity care supply of an individual hospital (D64) |
| Patient heterogeneity (I11) | Crowding out effect (E62) |
| Public hospitals serving disadvantaged patients (I14) | Competitive landscape for nonprofit hospitals (L39) |