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Center for Social Innovation

 

Research Project

The Effects of Nonprofit Versus For-Profit Ownership—Private Choices and Public Policy in Health Care

Stanford Graduate School of Business professor Daniel Kessler is the principal investigator on a study assessing the effects of nonprofit versus for profit ownership in healthcare. Professor Kessler, with Professor Mark McClellan, Stanford Economics Department and Stanford Medical School, will conduct empirical research on the effects of ownership in three different types of health care markets: hospitals, nursing homes, and insurers. This research will use extensive nationwide patients' individual-level Medicare and Medicaid claims data, matched with information on patients' health outcomes such as mortality and hospitalization with serious illness, and with data on hospitals from the American Hospital Association. Kessler and McClellan will investigate questions such as the following:

  • Does ownership status affect the measured cost and quality of care at hospitals and nursing homes?
  • Does ownership status affect some groups of patients more than others (e.g., gender, race, age, and type of illness)?
  • What proportion of these differences, if any, are due to the following factors: characteristics of geographic areas in which facilities of different ownership status are located; other characteristics of facilities correlated with but not caused by ownership status, such as size, system membership, or affiliation with an educational institution; and differential selection of patients into facilities of different ownership status?
  • Do the effects of ownership status on the cost and quality of care vary depending on the competitiveness of markets for hospital or nursing home services or on the competitiveness of markets for physician services?
  • Do the effects of ownership status vary depending on the importance of managed care in an area?
  • Does the ownership status of one facility in a market have strategic, or spillover, effects on the medical decision-making of other facilities in that market?
  • Do for-profit hospitals constrain the ability of nonprofit hospitals to provide social benefits or impose social costs?
  • Do for-profit HMOs behave differently than do nonprofit HMOs? For example, do the market entry decisions of for-profit HMOs differ from the entry decisions of nonprofit HMOs?
  • Conditional on entry, do for-profit HMOs engage in more or less patient selection than do nonprofit HMOs?