IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/vcontributions.4y2005i1n3.html
   My bibliography  Save this article

The Effect of the Nonprofit Motive on Hospital Competitive Behavior

Author

Listed:
  • Harrison Teresa D.

    () (Drexel University)

  • Lybecker Kristina M.

    () (Drexel University)

Abstract

In this paper, we employ three simple theoretical models of nonprofit hospitals to investigate equilibrium behavior when hospitals compete. Utilizing a differentiated Bertrand model, we examine how prices, quantity of patients served, service to the uninsured, and quality of care are affected as nonprofits place more weight on profit maximization. We find that the specification of the nonprofit motive greatly impacts the results. When the nonprofit motive is maximizing output, prices rise for both hospitals as the nonprofit moves away from its nonprofit motive. However, if the nonprofit cares about serving the uninsured, prices in the market fall. Finally, when hospitals compete on price and quality, more emphasis on profits results in an increase in price at the for-profit hospital and a decrease in price at the nonprofit hospital. These results suggest that the importance of the nonprofit motive has been underestimated and should be further investigated.

Suggested Citation

  • Harrison Teresa D. & Lybecker Kristina M., 2005. "The Effect of the Nonprofit Motive on Hospital Competitive Behavior," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-17, May.
  • Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:3
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/bejeap.2004.4.issue-1/bejeap.2005.4.1.1368/bejeap.2005.4.1.1368.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Natalie Privett & Feryal Erhun, 2011. "Efficient Funding: Auditing in the Nonprofit Sector," Manufacturing & Service Operations Management, INFORMS, vol. 13(4), pages 471-488, October.
    2. Guccio, Calogero & Lisi, Domenico & Pignataro, Giacomo, 2014. "Readmission and Hospital Quality under Prospective Payment System," MPRA Paper 56490, University Library of Munich, Germany.
    3. Petra Brhlikova & Andeas Ortmann, 2006. "The Impact of the Non-distribution Constraint and Its Enforcement on Entrepreneurial Choice, Price, and Quality," CERGE-EI Working Papers wp299, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 444-469, June.
    5. Christopher Hoag & Kamal Lamsal, 2014. "Nonprofit Firms in a Linear City with Nonnegative Profits," Working Papers 1403, Trinity College, Department of Economics.
    6. Petra Brhlikova, 2006. "Mixed Competition and Welfare under Various Nonprofit Objectives Mixed Competition under Various Cost Configurations," CERGE-EI Working Papers wp310, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Edgar Alan N. Rayo, 2012. "Institutional isomorphism among nonprofits in cause marketing partnerships," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(46bis), pages 121-136, December.
    8. Adam D. Rennhoff & Mark F. Owens, 2012. "Competition and the Strategic Choices of Churches," American Economic Journal: Microeconomics, American Economic Association, vol. 4(3), pages 152-170, August.
    9. Tomáš Rosenmayer, 2015. "The Study of Mix-form Markets in the Context of Economic Theories of Nonprofit Organizations," Ekonomika a Management, University of Economics, Prague, vol. 2015(3).
    10. Alvaro S Almeida, 2016. "The Role Of Private Non-Profit Healthcare Organizations In Nhs Systems: Implications For The Portuguese Hospital Devolution Program," FEP Working Papers 577, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:bpj:bejeap:v:contributions.4:y:2005:i:1:n:3. 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: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    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.

    We have no references for this item. You can help adding them by using 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.