The Governance of Not-for-Profit Organizations (original) (raw)

Commercialism in nonprofit hospitals

Journal of Policy Analysis and Management, 1998

The private nonprofit hospital is the dominant organizational form in the U.S. hospital industry. Various reasons have been advanced for its high market share. As hospitals undergo massive changes due in large part to changes in payment practices, there is widespread concern that nonprofit hospitals may become less committed to noncommercial activities. This may even be more likely when such hospitals convert to for-profit status. The empirical evidence indicates that, on average, hospitals of nonprofit and for-profit ownership are similar in the provision of uncompensated care, the quality of care, and the adoption of technology. Conversion of a nonprofit to for-profit status does not adversely affect the provision of uncompensated care on average. However, forprofits are more likely to be located in areas where consumers have the ability to pay for care. As hospital markets become more competitive and the opportunity for cross-subsidizing more unprofitable, collective-good activities will become increasingly difficult. Support for such activities, if they are to exist, will have to come from explicit public subsidies.

Organizational Form and Nursing Home Behavior

Nonprofit and Voluntary Sector Quarterly, 2000

The authors identify differences in performance among for-profit, nonprofit, and government-owned nursing homes in Minnesota. They investigate whether homes of diverse ownership types distribute their surpluses differently, if those differences narrow over time, and if the various ownership types react differently to changes in the regulatory environment. Government-owned and nonprofit homes spend more per resident day for nursing care costs than do independent for-profit homes. Chain affiliation is important in explaining persistent spending differences. There is an agency problem: Nursing homes belonging to chains behave differently from their independent counterparts. Secular non-profits belonging to national chains spend less of their surplus on nursing care costs after regulations allowed more of this form of spending to be recouped in rates charged to the residents. The secular firms affiliated with national chains spend less on nursing care than the control group. As the pred...

Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care?

SSRN Electronic Journal, 2000

Nonprofit hospitals receive favorable tax treatment in exchange for providing socially beneficial activities. Extending this rationale would suggest that, insofar as suppression of competition would allow nonprofits to cross-subsidize care for needy populations, nonprofit hospital mergers should be evaluated differently than mergers of for-profit hospitals. However, this rationale rests upon the premise that nonprofit hospitals with greater market power provide more care to the needy. In this paper, we develop a theoretical model showing that the welfare implications of an antitrust policy that favors nonprofit hospitals depends on the link between market power and charity care provision. To test the link, we use three measures of charity care-two dollardenominated and one based on service volume-to study charity care provision by for-profit and non-profit hospitals under different competition conditions. Using detailed California data from 2001 to 2011, we find no evidence that nonprofit hospitals are more likely than for-profit hospitals to provide more charity care, or to offer more unprofitable services, when competition falls. Overall, while some courts have given deference to defendants' nonprofit status, our study finds no empirical evidence that such hospitals provide greater charity care as they have greater market power.

COEXISTENCE OF NONPROFIT, FOR-PROFIT AND PUBLIC SECTOR INSTITUTIONS

**: If nonpro¢t organizations are superior institutions in resolving informational asymmetry and resulting contract failure, why do nonpro¢t (NPs), for-pro¢t (FPs) and government/public institutions (GPs) survive in the same industry? This article explicitly models the nonconvex budget set for the consumer that arises through the juxtaposition of the ine¤ciencies and contract failures that occur in the three sectors. Because the consumer is willing to trade quality for e¤ciency and price, varying market shares for NPs, FPs and GPs can exist in the same industry. The theory o¡ered complements the functionalist explanation of the existence of nonpro¢ts advanced by Weisbrod and Hansmann using a micro-analysis.

Models of Competition between one For-Profit and one Nonprofit Firm

SSRN Electronic Journal, 2000

To study the coexistence of two different ownership forms within an industry, I develop a simple model of competition between one forprofit and one nonprofit firm. The two firms have different objectives and face different constraints due to their choice of ownership status. Assuming heterogenous consumers I derive quality-price bundles provided by the two firms and their market shares under various conditions.