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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.

Suggested Citation

  • Jill R. Horwitz & Austin Nichols, 2007. "What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix," NBER Working Papers 13246, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13246
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Baltagi, Badi H. & Yen, Yin-Fang, 2014. "Hospital treatment rates and spillover effects: Does ownership matter?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 193-202.
    2. Filistrucchi, L. & Prüfer, J., 2013. "Faithful Strategies : How Religion Shapes Nonprofit Management," Discussion Paper 2013-052, Tilburg University, Center for Economic Research.
    3. Jens Prüfer, 2011. "Competition And Mergers Among Nonprofits," Journal of Competition Law and Economics, Oxford University Press, vol. 7(1), pages 69-92.
    4. Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
    5. Jonathan Skinner & Douglas Staiger, 2015. "Technology Diffusion and Productivity Growth in Health Care," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 951-964, December.
    6. repec:eee:cysrev:v:79:y:2017:i:c:p:148-159 is not listed on IDEAS
    7. Pauline Allen & Will Bartlett & Virginie Perotin & Bernarda Zamora & Simon Turner, 2011. "New Forms Of Provider In The English National Health Service," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(1), pages 77-95, March.
    8. Kazuhiko Mikami, 2013. "Not-for-Profit Hospitals and the Quality of Medical Care," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(3), pages 490-505, September.
    9. 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.
    10. Lapo Filistrucchi & Jens Prüfer, 2013. "Nonprofits are not alike: The Role of Catholic and Protestant Affiliation," Working Papers - Economics wp2013_07.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • I1 - Health, Education, and Welfare - - Health
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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