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What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix

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  • 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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13246.

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Date of creation: Jul 2007
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Handle: RePEc:nbr:nberwo:13246

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Cited by:
  1. Horwitz, Jill R. & Nichols, Austin, 2009. "Hospital ownership and medical services: Market mix, spillover effects, and nonprofit objectives," Journal of Health Economics, Elsevier, vol. 28(5), pages 924-937, September.
  2. Jonathan Skinner & Douglas Staiger, 2009. "Technology Diffusion and Productivity Growth in Health Care," NBER Working Papers 14865, National Bureau of Economic Research, Inc.
  3. Seth Freedman & Haizhen Lin & Kosali Simon, 2012. "Public Health Insurance Expansions and Hospital Technology Adoption," Working Papers 2012-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.

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