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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
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.
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.
- 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.