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Nonprofit Organizations in the Health Sector

Author

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  • Richard G. Frank
  • David S. Salkever

Abstract

Government appears to both promote and mistrust nonprofit organizations in the health sector. Tax exemptions, subsidies, and preferential treatment in contracts support these organizations. Legislation that links the supply of charity care to tax exemptions demonstrates mistrust. In this paper, the authors argue that information asymmetries lie at the heart of the current discomfort with tax policy toward nonprofit health-care providers. The authors examine current policy in terms of the rationale for the exemption of nonprofit health-care organizations from taxes as well as the ability of government to monitor performance of these organizations.

Suggested Citation

  • Richard G. Frank & David S. Salkever, 1994. "Nonprofit Organizations in the Health Sector," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 129-144, Fall.
    • Handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:129-44
    Note: DOI: 10.1257/jep.8.4.129
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.4.129
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    References listed on IDEAS

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    1. Rose-Ackerman, Susan, 1987. "Ideals versus Dollars: Donors, Charity Managers, and Government Grants," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 810-823, August.
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    3. Pauly, Mark V, 1987. "Nonprofit Firms in Medical Markets," American Economic Review, American Economic Association, vol. 77(2), pages 257-262, May.
    4. Thomas McGuire & Michael Riordan, 1993. "Contracting for Community-Based Public Mental Health Services," Papers 0043, Boston University - Industry Studies Programme.
    5. Edward C. Norton & Douglas O. Staiger, 1994. "How Hospital Ownership Affects Access to Care for the Uninsured," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 171-185, Spring.
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    Cited by:

    1. Michael Alexeev & Ivan Dedyukhin & Leonid Polishchuk, 2024. "Ownership, Asymmetric Information, and Quality of Care for the Elderly: Evidence from US Nursing Homes During the COVID-19 Pandemic," CAEPR Working Papers 2024-006 Classification-, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    2. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    3. Ettner, Susan L. & Hermann, Richard C., 2001. "The role of profit status under imperfect information: evidence from the treatment patterns of elderly Medicare beneficiaries hospitalized for psychiatric diagnoses," Journal of Health Economics, Elsevier, vol. 20(1), pages 23-49, January.
    4. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1343-1373.
    5. William M. Gentry & John Penrod, 2000. "The Tax Benefits of Not-for-Profit Hospitals," NBER Chapters, in: The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions, pages 285-324, National Bureau of Economic Research, Inc.
    6. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487, Elsevier.
    7. Noguchi, Haruko & Shimizutani, Satoshi, 2007. "Nonprofit/for-profit status and earning differentials in the Japanese at-home elderly care industry: Evidence from micro-level data on home helpers and staff nurses," Journal of the Japanese and International Economies, Elsevier, vol. 21(1), pages 106-120, March.
    8. Yoon, Jangho, 2011. "Effect of increased private share of inpatient psychiatric resources on jail population growth: Evidence from the United States," Social Science & Medicine, Elsevier, vol. 72(4), pages 447-455, February.
    9. H. Naci Mocan, 1995. "The Child Care Industry: Cost Functions, Efficiency, and Quality," NBER Working Papers 5293, National Bureau of Economic Research, Inc.
    10. Youngju Kang & Minyoung Kim & Kwangho Jung, 2020. "The Equity of Health Care Spending in South Korea: Testing the Impact of Publicness," IJERPH, MDPI, vol. 17(5), pages 1-20, March.
    11. Kanika Kapur & Burton A. Weisbrod, 2000. "The Roles of Government and Nonprofit Suppliers in Mixed Industries," Public Finance Review, , vol. 28(4), pages 275-308, July.
    12. Machnes, Yaffa, 1996. "Incentives and production of mental health services," European Journal of Political Economy, Elsevier, vol. 12(3), pages 459-466, November.
    13. Jill R. Horwitz, 2005. "Does Corporate Ownership Matter? Service Provision in the Hospital Industry," NBER Working Papers 11376, National Bureau of Economic Research, Inc.
    14. Fidler, Armin H. & Haslinger, Reinhard R. & Hofmarcher, Maria M. & Jesse, Maris & Palu, Toomas, 2007. "Incorporation of public hospitals: A "Silver Bullet" against overcapacity, managerial bottlenecks and resource constraints?: Case studies from Austria and Estonia," Health Policy, Elsevier, vol. 81(2-3), pages 328-338, May.
    15. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    16. Vrabková Iveta & Ertingerová Izabela & Vavrek Roman, 2019. "Information gaps in the market for social services: retirement homes in the Czech Republic," Review of Economic Perspectives, Sciendo, vol. 19(3), pages 175-191, September.
    17. Yoshiho Matsunaga & Naoto Yamauchi, 2004. "Is the Government Failure Theory Still Relevant? A panel analysis using US state level data," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 227-263, June.
    18. Edward Schumacher, 2009. "Does Public or Not-for-Profit Status Affect the Earnings of Hospital Workers?," Journal of Labor Research, Springer, vol. 30(1), pages 9-34, March.
    19. Leone, Andrew J. & Van Horn, R. Lawrence, 2005. "How do nonprofit hospitals manage earnings?," Journal of Health Economics, Elsevier, vol. 24(4), pages 815-837, July.
    20. Tomas Philipson & Darius Lakdawalla, 2001. "Medical Care Output and Productivity in the Nonprofit Sector," NBER Chapters, in: Medical Care Output and Productivity, pages 119-140, National Bureau of Economic Research, Inc.
    21. Daniel Friesner & Robert Rosenman, 2002. "A Dynamic Property Rights Theory of the Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 311-333.
    22. David M. Cutler & Jill R. Horwitz, 1998. "Converting Hospitals from Not-for-profit to For-profit Status," NBER Working Papers 6672, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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