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The Role of Donations in Quality Disclosure: Evidence from Nonprofit Nursing Homes Full Access

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  • Susan F. Lu

    () (Purdue University)

Abstract

This paper uses a quality disclosure policy--the Nursing Home Quality Initiative, which mandates the public reporting of quality information on selected dimensions--to investigate how nonprofit nursing homes react to economic incentives. The study finds that nonprofits are as responsive as for-profits to quality disclosure: quality improves along the reported dimensions and diminishes along the unreported ones. Further tests show that nonprofits may respond to donations and fail to mimic for-profits when competing with them. These findings suggest that donor response may be the motive for nonprofits to respond to quality disclosure in the same way as for-profit alternatives.

Suggested Citation

  • Susan F. Lu, 2016. "The Role of Donations in Quality Disclosure: Evidence from Nonprofit Nursing Homes Full Access," American Journal of Health Economics, MIT Press, vol. 2(4), pages 431-462, Fall.
  • Handle: RePEc:tpr:amjhec:v:2:y:2016:i:4:p:431-462
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jhecon:v:55:y:2017:i:c:p:108-120 is not listed on IDEAS
    2. Jones, Daniel B. & Propper, Carol & Smith, Sarah, 2017. "Wolves in sheep’s clothing: Is non-profit status used to signal quality?," Journal of Health Economics, Elsevier, pages 108-120.

    More about this item

    Keywords

    nonprofit; quality disclosure; donation; teaching-to-the-test;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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