This paper examines the theoretical and empirical differences between the behavior of nonprofit and for-profit hospitals. Considerations are extended to include the possibility of collusion when hospitals make strategic choices. The operating objectives of the firms take into account price, quantity, and quality. Defining the quality of hospital care is discussed and applied to the empirical work. The model predicts nonprofit hospitals will provide a higher level of quality and a lower price than for-profit hospitals. Theoretically, under a collusive outcome for nonprofits, price will increase but the change in quality is indeterminate relative to a competitive, non-collusive outcome. The empirical section offers evidence of differences between nonprofit and for-profit hospital behavior. Nonprofit hospitals do provide higher quality and a lower price when compared to their for-profit rivals. It seems the competitive forces extend to the area of quality. There is evidence that increased competition between nonprofits fosters quality competition. From the for-profit perspective, quality competition appears to be provoked in markets where the for-profit competes more directly against nonprofits. This paper provides theoretical and empirical analyses of hospital interactions and how these interactions change depending upon the type of control.

"[This book is] the most authoritative assessment of the advantages and disadvantages of recent trends toward the commercialization of health care," says Robert Pear of The New York Times. This major study by the Institute of Medicine examines virtually all aspects of for-profit health care in the United States, including the quality and availability of health care, the cost of medical care, access to financial capital, implications for education and research, and the fiduciary role of the physician. In addition to the report, the book contains 15 papers by experts in the field of for-profit health care covering a broad range of topicsâ€"from trends in the growth of major investor-owned hospital companies to the ethical issues in for-profit health care. "The report makes a lasting contribution to the health policy literature." â€"Journal of Health Politics, Policy and Law.

Theoretical models that were developed in the 1970's predict large differences in behavior between for-profit and nonprofit hospitals, while recent empirical studies have consistently failed to detect these differences. This paper attempts to solve this apparent contradiction by suggesting that organizations with different objectives may behave similarly under certain market conditions. By tracking key variables of hospital behavior in the United States between 1960 and 1999, this paper argues that the similar behavior of hospitals under different ownership structure found in recent empirical studies may be the result of a continuing convergence process. Theoretical analysis suggests that the introduction of federally funded insurance for certain patient groups may account for the growing convergence in the behavior of these two ownership types. Analysis of hospital-level data for California indicates that the convergence was effected largely through acquisitions of nonprofit hospitals by for-profit institutions and vice versa.

Not-for-profit organizations play a critical role in the American economy. In health care, education, culture, and religion, we trust not-for-profit firms to serve the interests of their donors, customers, employees, and society at large. We know that such firms don't try to maximize profits, but what do they maximize? This book attempts to answer that question, assembling leading experts on the economics of the not-for-profit sector to examine the problems of the health care industry, art museums, universities, and even the medieval church. Contributors look at a number of different aspects of not-for-profit operations, from the problems of fundraising, endowments, and governance to specific issues like hospital advertising. The picture that emerges is complex and surprising. In some cases, not-for-profit firms appear to work extremely well: competition for workers, customers, and donors leads not-for-profit organizations to function as efficiently as any for-profit firm. In other contexts, large endowments and weak governance allow elite workers to maximize their own interests, rather than those of their donors, customers, or society at large. Taken together, these papers greatly advance our knowledge of the dynamics and operations of not-for-profit organizations, revealing the under-explored systems of pressures and challenges that shape their governance.

An introduction to the new health care for profit. Legal differences between investor-owned and nonprofit health care institutions. Wall Street and the for-profit hospital management companies. When investor-owned corporations buy hospitals: some issues and concerns. Physician involvement in hospital decision making. Economic incentives and clinical decisions. Ethical dilemmas of for-profit enterprise in health care. Secondary income from recommended treatment: should fiduciary principles constrain physician behavior?

How the behavior of non-profit organizations differs from that of for-profit organizations has been the topic of a wide body of research. The motivational and behavioral differences resulting from the two organizational forms are particularly important in the U.S. health-care sector an industry dominated by non-profit enterprise. This paper outlines some of the theories of non-profit hospital behavior and reviews some of the empirical work related to thosetheories. I then examine empirically whether there is a difference in wages and salaries paid to seven categories of hospital employee in different types of hospitals. To my knowledge, there have been no studies that evaluate directly whether non-profit hospitals pay more than their for-profit counterparts. I find that non-profit hospitals pay significantly higher wages to their employees in five of seven major categories. In the conclusion I highlight those theories that are consistent with these empirical findings and those that are not.