IDEAS home Printed from
   My bibliography  Save this article

Nonprofit Organizations in the Health Sector


  • Richard G. Frank
  • David S. Salkever


Government appears to both promote and mistrust nonprofit organizations in the health sector. Tax exemptions, subsidies, and preferential treatment in contracts support these organizations. Legislation that links the supply of charity care to tax exemptions demonstrates mistrust. In this paper, the authors argue that information asymmetries lie at the heart of the current discomfort with tax policy toward nonprofit health-care providers. The authors examine current policy in terms of the rationale for the exemption of nonprofit health-care organizations from taxes as well as the ability of government to monitor performance of these organizations.

Suggested Citation

  • Richard G. Frank & David S. Salkever, 1994. "Nonprofit Organizations in the Health Sector," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 129-144, Fall.
  • Handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:129-44 Note: DOI: 10.1257/jep.8.4.129

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 659-679.
    2. Pauly, Mark V, 1987. "Nonprofit Firms in Medical Markets," American Economic Review, American Economic Association, vol. 77(2), pages 257-262, May.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. William M. Gentry & John Penrod, 2000. "The Tax Benefits of Not-for-Profit Hospitals," NBER Chapters,in: The Changing Hospital Industry: Comparing For-Profit and Not-for-Profit Institutions, pages 285-324 National Bureau of Economic Research, Inc.
    2. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487 Elsevier.
    3. Noguchi, Haruko & Shimizutani, Satoshi, 2007. "Nonprofit/for-profit status and earning differentials in the Japanese at-home elderly care industry: Evidence from micro-level data on home helpers and staff nurses," Journal of the Japanese and International Economies, Elsevier, vol. 21(1), pages 106-120, March.
    4. H. Naci Mocan, 1995. "The Child Care Industry: Cost Functions, Efficiency, and Quality," NBER Working Papers 5293, National Bureau of Economic Research, Inc.
    5. Kanika Kapur & Burton A. Weisbrod, 2000. "The Roles of Government and Nonprofit Suppliers in Mixed Industries," Public Finance Review, , vol. 28(4), pages 275-308, July.
    6. Jill R. Horwitz, 2005. "Does Corporate Ownership Matter? Service Provision in the Hospital Industry," NBER Working Papers 11376, National Bureau of Economic Research, Inc.
    7. Fidler, Armin H. & Haslinger, Reinhard R. & Hofmarcher, Maria M. & Jesse, Maris & Palu, Toomas, 2007. "Incorporation of public hospitals: A "Silver Bullet" against overcapacity, managerial bottlenecks and resource constraints?: Case studies from Austria and Estonia," Health Policy, Elsevier, vol. 81(2-3), pages 328-338, May.
    8. Edward Schumacher, 2009. "Does Public or Not-for-Profit Status Affect the Earnings of Hospital Workers?," Journal of Labor Research, Springer, vol. 30(1), pages 9-34, March.
    9. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1343-1373.
    10. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    11. Ettner, Susan L. & Hermann, Richard C., 2001. "The role of profit status under imperfect information: evidence from the treatment patterns of elderly Medicare beneficiaries hospitalized for psychiatric diagnoses," Journal of Health Economics, Elsevier, vol. 20(1), pages 23-49, January.
    12. Yoon, Jangho, 2011. "Effect of increased private share of inpatient psychiatric resources on jail population growth: Evidence from the United States," Social Science & Medicine, Elsevier, vol. 72(4), pages 447-455, February.
    13. Machnes, Yaffa, 1996. "Incentives and production of mental health services," European Journal of Political Economy, Elsevier, vol. 12(3), pages 459-466, November.
    14. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    15. Leone, Andrew J. & Van Horn, R. Lawrence, 2005. "How do nonprofit hospitals manage earnings?," Journal of Health Economics, Elsevier, vol. 24(4), pages 815-837, July.
    16. Tomas Philipson & Darius Lakdawalla, 2001. "Medical Care Output and Productivity in the Nonprofit Sector," NBER Chapters,in: Medical Care Output and Productivity, pages 119-140 National Bureau of Economic Research, Inc.
    17. Daniel Friesner & Robert Rosenman, 2002. "A Dynamic Property Rights Theory of the Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 311-333.
    18. David M. Cutler & Jill R. Horwitz, 1998. "Converting Hospitals from Not-for-profit to For-profit Status," NBER Working Papers 6672, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:129-44. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.