'Profit' variability in for-profit and not-for-profit hospitals

J Health Econ. 1991 Oct;10(3):259-89. doi: 10.1016/0167-6296(91)90030-q.


This paper proposes two tests of the hypothesis that not-for-profit hospitals (NFPs) behave differently than for-profit hospitals. The profit variability test states that the profits of an NFP will be less variable over time than profits of a for-profit hospital if the NFP maximizes utility subject to a profit constraint. The second test examines whether NFP profits respond less to change in exogenous factors, such as Medicare reimbursement rates, than profits of for-profit hospitals. Both tests, performed on panel data from 1983 to 1988, support the hypothesis that NFPs behave differently than for-profit hospitals.

Publication types

  • Comparative Study
  • Research Support, Non-U.S. Gov't

MeSH terms

  • Cost Allocation
  • Decision Making, Organizational
  • Financial Management, Hospital / methods*
  • Health Services Research
  • Hospitals, Proprietary / economics*
  • Hospitals, Voluntary / economics*
  • Income / statistics & numerical data*
  • Medicare
  • Models, Econometric*
  • Ownership / economics
  • Prospective Payment System
  • United States