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Modeling Internal Decision Making Process: An Explanation Of Conflicting Empirical Results On Behavior Of Non‐Profit And For‐Profit Hospitals

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  • KATHLEEN A. CARROLL
  • JANE E. RUSESKI

Abstract

This paper develops multiobjective models of hospital decision making that incorporate the internal decision process in both a for-profit and a nonprofit hospital. Predicted output and quality for a nonprofit hospital differ from those for a for-profit hospital under some conditions but converge under others. Convergence may be the result of a complex internal decision structure with decision control primarily by physicians; similar objectives across different organizational forms; or differing constraints. The mechanisms underlying these outcomes provide explanations for conflicting result in empirical studies of nonprofit and for-profit hospitals and provide a different rationale for convergence than nonprofit response to competition from for-profit hospitals. Understanding the source of convergence is important for policies directed toward the tax treatment of nonproift hospitals.
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Suggested Citation

  • Kathleen A. Carroll & Jane E. Ruseski, 2011. "Modeling Internal Decision Making Process: An Explanation Of Conflicting Empirical Results On Behavior Of Non‐Profit And For‐Profit Hospitals," Contemporary Economic Policy, Western Economic Association International, vol. 29(4), pages 510-523, October.
    • Handle: RePEc:bla:coecpo:v:29:y:2011:i:4:p:510-523
    DOI: j.1465-7287.2010.00245.x
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    File URL: http://hdl.handle.net/10.1111/j.1465-7287.2010.00245.x
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    Cited by:

    1. Debadutta K. Panda, 2019. "Competitive dynamics in not-for-profit organizations: evidence from India," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1251-1274, December.
    2. Kathleen Carroll & Lisa M. Dickson & Jane E. Ruseski, 2013. "Do Faculty Matter? Effects of Faculty Participation in University Decisions," UMBC Economics Department Working Papers 13-06, UMBC Department of Economics.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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