Jump to ContentJump to Main Navigation
The Governance of Not-for-Profit Organizations$
Users without a subscription are not able to see the full content.

Edward L. Glaeser

Print publication date: 2003

Print ISBN-13: 9780226297859

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226297866.001.0001

Show Summary Details
Page of

PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 25 September 2021

Ownership Form and Trapped Capital in the Hospital Industry

Ownership Form and Trapped Capital in the Hospital Industry

Chapter:
(p.45) 1 Ownership Form and Trapped Capital in the Hospital Industry
Source:
The Governance of Not-for-Profit Organizations
Author(s):
Henry Hansmann, Daniel Kessler, Mark McClellan
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226297866.003.0002

Numerous empirical studies have sought to identify how differences in the incentives facing managers of nonprofit and for-profit firms lead to differences in economic performance. This chapter focuses on a largely neglected aspect of performance—rapidity of exit—where differences in behavior between nonprofit and for-profit hospitals seem likely to be unusually pronounced, and where those differences may have important implications for the overall structure and performance of the industry. Managers of for-profit hospitals and, to a lesser degree, managers of public hospitals and of religiously affiliated nonprofit hospitals, may have incentives to minimize costs of service and hence to eliminate unused or underused capacity. Managers of unaffiliated nonprofit institutions, in contrast, may not feel such an incentive so long as net cash flow does not become negative. Consequently, it is a plausible hypothesis that such nonprofit hospitals adjust capacity much more slowly than do for-profit firms in response to reductions in demand, effectively serving as capital traps. The results presented here provide strong support for that hypothesis. For-profit hospitals are the most responsive to reductions in demand, followed in turn by public and religiously affiliated nonprofit hospitals, while secular nonprofits are distinctly the least responsive of the four ownership types.

Keywords:   rapidity of exit, secular nonprofit hospitals, population change, nonprofit hospitals, ownership, incentives

Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.