Why most private hospitals are nonprofit

In recent decades, restrictions that have been imposed on hospitals organized for profit have served to restructure the industry, generating a constant trend toward nonprofit organizations. Small proprietary hospitals in particular have disappeared while corporate chains have come to dominate what is left of the for-profit hospital sector. The trend toward nonprofit hospitals is not explained by the failure of the health service markets and is not the result of a desire to serve the public interest more effectively. Although a number of arguments have been advanced to explain the shift, the hypothesis that seems most consistent with the existing evidence is that the nonprofit form of organization serves most effectively to strengthen the restrictive character of the market for physicians' services and thereby to serve the individual economic interests of the physicians.