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Related Experiment Videos

Nonprofit conversion: theory, evidence, and state policy options

J A Marsteller1, R R Bovbjerg, L M Nichols

  • 1Health Policy Center, Urban Institute, Washington, DC 20037, USA.

Health Services Research
|December 29, 1998
PubMed
Summary

Nonprofit hospitals offer more uncompensated care, but measurable differences in cost, quality, and price between nonprofit and for-profit hospitals are inconclusive. State oversight of nonprofit conversions is crucial for managing assets and monitoring market impacts.

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Area of Science:

  • Health economics
  • Healthcare policy and management
  • Nonprofit sector studies

Background:

  • Nonprofit hospitals and health plans play a significant role in healthcare markets, often justified by charity care, community benefits, and consumer protection.
  • For-profit entities are primarily driven by efficiency incentives, leading to potential differences in operational goals compared to nonprofits.

Purpose of the Study:

  • To delineate the contributions of nonprofit healthcare organizations to market dynamics.
  • To examine state policy frameworks governing the conversion of nonprofit healthcare entities to for-profit status.
  • To analyze the implications of ownership structure on healthcare market performance and patient care.

Main Methods:

  • Utilized secondary national and state-level data spanning from 1980 to the present.

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  • Conducted policy analysis, including a review of statutes, rules, and court decisions.
  • Developed a conceptual economic framework and analyzed empirical, legal, and theoretical literature.

    • Main Results:

    • Empirical evidence shows nonprofit hospitals provide more uncompensated care than for-profit counterparts.
    • Measured differences in cost, pricing, and quality between nonprofit and for-profit hospitals are largely undetectable or inconclusive.
    • States possess significant authority over nonprofit conversions, with legislative oversight varying from deferential to highly restrictive.

    Conclusions:

    • Effective state oversight of nonprofit asset disposition during conversions is critical.
    • Monitoring local market conditions and community benefits is essential to assess conversion impacts.
    • A mixed market of for-profit and nonprofit providers may enhance overall market performance; states may need to regulate to maintain quality and access if nonprofits decline.