Thursday, November 6, 2008

Horwitz and Nichols Report on How Nonprofit Ownership Affects Rural Hospitals

Jill R. Horwitz (Michigan) and Austin Nichols (the Urban Institute) have posted Rural Hospital Ownership and Competition on SSRN.  Here is the abstract:

This paper asks how hospital ownership - nonprofit, for-profit, or government - affects medical service provision in the rural context. Here we consider two distinct ownership effects: 1) the direct effect of hospital ownership and 2) the spillover effect of the market mix of hospital types on a hospital's service offerings. We find that ownership matters a great deal in the rural context. Nonprofit are more likely than for-profit hospitals to offer unprofitable services, many of which have previously been found to be in short supply in rural areas. Nonprofits also respond less than for-profits to a change in profitability of services. Moreover, nonprofit hospitals with more for-profit competitors act more like for-profits than other nonprofits, perhaps because they must make up for lost revenue due to cream-skimming by for-profit hospitals or because the characteristics of those markets favor that type of behavior.


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