Capital expenditure decisions and the role of the not-for-profit hospital: an application of a social goods model.

Abstract

In recent years, there has been considerable controversy over whether not-for-profit (NFP) and for-profit (FP) hospitals really differ from each other in meaningful ways. Specifically, the ongoing debate has concerned whether NFP hospitals pursue objectives that differ from the objectives of FP hospitals and, if so, whether these different objectives get translated into different sorts of behaviors. Although it is difficult to derive empirical support for hypothesized objective functions of NFP hospitals (Pauly 1987a), some research studies have suggested important substantive differences in the behavior of NFP and FP hospitals. These findings include production of more costly and higher priced care in FP hospitals