Horwitz and Nichols Report on How Nonprofit Ownership Affects Rural Hospitals

Jill R. Horwitz (Michigan) and Austin Nichols (the Urban Institute) have posted Rural Hospital Ownership and Competition on SSRN.  Here is the abstract:

This paper asks how hospital ownership – nonprofit,for-profit, or government – affects medical service provision in therural context. Here we consider two distinct ownership effects: 1) thedirect effect of hospital ownership and 2) the spillover effect of themarket mix of hospital types on a hospital’s service offerings. We findthat ownership matters a great deal in the rural context. Nonprofitare more likely than for-profit hospitals to offer unprofitableservices, many of which have previously been found to be in shortsupply in rural areas. Nonprofits also respond less than for-profits toa change in profitability of services. Moreover, nonprofithospitals with more for-profit competitors act more like for-profitsthan other nonprofits, perhaps because they must make up for lostrevenue due to cream-skimming by for-profit hospitals or because thecharacteristics of those markets favor that type of behavior.

LHM