Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v58y2020i3p1183-1199.html
   My bibliography  Save this article

Antitrust Treatment Of Nonprofits: Should Hospitals Receive Special Care?

Author

Listed:
  • Cory S. Capps
  • Dennis W. Carlton
  • Guy David
Abstract
Nonprofit hospitals receive favorable tax treatment in exchange for providing socially beneficial activities. Extending this rationale suggests that nonprofit hospital mergers should be evaluated differently than mergers of for‐profit hospitals because suppression of competition may also allow nonprofits to cross‐subsidize care for the poor. Using detailed California data, we find no evidence that nonprofit hospitals are more likely than for‐profit hospitals to provide more charity care or offer unprofitable services in response to an increase in market power. Therefore, we find no empirical justification for applying, as some courts have suggested, different antitrust standards for nonprofit hospitals. (JEL I11, L1, L44)

Suggested Citation

  • Cory S. Capps & Dennis W. Carlton & Guy David, 2020. "Antitrust Treatment Of Nonprofits: Should Hospitals Receive Special Care?," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1183-1199, July.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:3:p:1183-1199
    DOI: 10.1111/ecin.12881
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecin.12881
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecin.12881?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Capps, Cory & Dranove, David & Satterthwaite, Mark, 2003. "Competition and Market Power in Option Demand Markets," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 737-763, Winter.
    2. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487, Elsevier.
    3. Horwitz, Jill R. & Nichols, Austin, 2009. "Hospital ownership and medical services: Market mix, spillover effects, and nonprofit objectives," Journal of Health Economics, Elsevier, vol. 28(5), pages 924-937, September.
    4. Michael G. Vita & Seth Sacher, 2001. "The Competitive Effects of Not‐for‐Profit Hospital Mergers: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 63-84, March.
    5. Mark McClellan, 1997. "Hospital Reimbursement Incentives: An Empirical Analysis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 91-128, March.
    6. Keeler, Emmett B. & Melnick, Glenn & Zwanziger, Jack, 1999. "The changing effects of competition on non-profit and for-profit hospital pricing behavior," Journal of Health Economics, Elsevier, vol. 18(1), pages 69-86, January.
    7. Dranove, David & Ludwick, Richard, 1999. "Competition and pricing by nonprofit hospitals: a reassessment of Lynk's analysis," Journal of Health Economics, Elsevier, vol. 18(1), pages 87-98, January.
    8. Robert Connor & Roger Feldman & Bryan Dowd, 1998. "The Effects of Market Concentration and Horizontal Mergers on Hospital Costs and Prices," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(2), pages 159-180.
    9. Dennis W. Carlton & Gustavo E. Bamberger & Roy J. Epstein, 1995. "Antitrust and Higher Education: Was There a Conspiracy to Restrict Financial Aid?," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 131-147, Spring.
    10. Ho, Vivian & Hamilton, Barton H., 2000. "Hospital mergers and acquisitions: does market consolidation harm patients?," Journal of Health Economics, Elsevier, vol. 19(5), pages 767-791, September.
    11. Leemore Dafny, 2009. "Estimation and Identification of Merger Effects: An Application to Hospital Mergers," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 523-550, August.
    12. Jens Prüfer, 2011. "Competition And Mergers Among Nonprofits," Journal of Competition Law and Economics, Oxford University Press, vol. 7(1), pages 69-92.
    13. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    14. Garmon Chris, 2009. "Hospital Competition and Charity Care," Forum for Health Economics & Policy, De Gruyter, vol. 12(1), pages 1-35, May.
    15. Dranove, David & Lindrooth, Richard, 2003. "Hospital consolidation and costs: another look at the evidence," Journal of Health Economics, Elsevier, vol. 22(6), pages 983-997, November.
    16. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-247, March.
    17. Sloan, Frank A. & Picone, Gabriel A. & TaylorJr., Donald H. & Chou, Shin-Yi, 2001. "Hospital ownership and cost and quality of care: is there a dime's worth of difference?," Journal of Health Economics, Elsevier, vol. 20(1), pages 1-21, January.
    18. Ritva Reinikka & Jakob Svensson, 2010. "Working for God? Evidence from a Change in Financing of Nonprofit Health Care Providers in Uganda," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1159-1178, December.
    19. Tomas J. Philipson & Richard A. Posner, 2009. "Antitrust in the Not-for-Profit Sector," Journal of Law and Economics, University of Chicago Press, vol. 52(1), pages 1-18, February.
    20. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 577-615.
    21. Deborah Haas-Wilson & Christopher Garmon, 2011. "Hospital Mergers and Competitive Effects: Two Retrospective Analyses," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 17-32.
    22. Almond, Douglas & Currie, Janet & Simeonova, Emilia, 2011. "Public vs. private provision of charity care? Evidence from the expiration of Hill-Burton requirements in Florida," Journal of Health Economics, Elsevier, vol. 30(1), pages 189-199, January.
    23. Gruber, Jonathan, 1994. "The effect of competitive pressure on charity: Hospital responses to price shopping in California," Journal of Health Economics, Elsevier, vol. 13(2), pages 183-211, July.
    24. David Dranove & Craig Garthwaite & Christopher Ody, 2017. "How do nonprofits respond to negative wealth shocks? The impact of the 2008 stock market collapse on hospitals," RAND Journal of Economics, RAND Corporation, vol. 48(2), pages 485-525, May.
    25. Gruber, Jonathan, 1994. "Erratum to "The effect of competitive pressure on charity: hospital responses to price shopping in California [Journal of Health Economics 13 (1994) 183-212]," Journal of Health Economics, Elsevier, vol. 13(4), pages 503-503.
    26. Aileen Thompson, 2011. "The Effect of Hospital Mergers on Inpatient Prices: A Case Study of the New Hanover-Cape Fear Transaction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 91-101.
    27. Krishnan, Ranjani A. & Krishnan, Hema, 2003. "Effects of hospital mergers and acquisitions on prices," Journal of Business Research, Elsevier, vol. 56(8), pages 647-656, August.
    28. Krishnan, Ranjani, 2001. "Market restructuring and pricing in the hospital industry," Journal of Health Economics, Elsevier, vol. 20(2), pages 213-237, March.
    29. David, Guy & Lindrooth, Richard C. & Helmchen, Lorens A. & Burns, Lawton R., 2014. "Do hospitals cross-subsidize?," Journal of Health Economics, Elsevier, vol. 37(C), pages 198-218.
    30. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1343-1373.
    31. John Simpson & Richard Shin, 1998. "Do Nonprofit Hospitals Exercise Market Power?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(2), pages 141-157.
    32. Lynk, William J, 1995. "Nonprofit Hospital Mergers and the Exercise of Market Power," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 437-461, October.
    33. Keaton S. Miller & Wesley W. Wilson, 2018. "Governance Structure and Exit: Evidence from California Hospitals," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 31-55, August.
    34. Steven Tenn, 2011. "The Price Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 65-82.
    35. Mark Duggan, 2002. "Hospital Market Structure and the Behavior of Not-For-Profit Hospitals," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 433-446, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arzi Adbi & Ajay Bhaskarabhatla & Chirantan Chatterjee, 2020. "Stakeholder Orientation and Market Impact: Evidence from India," Journal of Business Ethics, Springer, vol. 161(2), pages 479-496, January.
    2. Maysam Rabbani, 2021. "Non-profit hospital mergers: the effect on healthcare costs and utilization," International Journal of Health Economics and Management, Springer, vol. 21(4), pages 427-455, December.
    3. Paul Goldsmith-Pinkham & Maxim L. Pinkovskiy & Jacob Wallace, 2020. "The Great Equalizer: Medicare and the Geography of Consumer Financial Strain," Staff Reports 911, Federal Reserve Bank of New York.
    4. Amanda Beck & Collin Gilstrap & Jordan Rippy & Brian Vansant, 2021. "Strategic reporting by nonprofit hospitals: an examination of bad debt and charity care," Review of Accounting Studies, Springer, vol. 26(3), pages 933-970, September.
    5. Owsley, Kelsey M. & Lindrooth, Richard C., 2022. "Understanding the relationship between nonprofit hospital community benefit spending and system membership: An analysis of independent hospital acquisitions," Journal of Health Economics, Elsevier, vol. 86(C).
    6. Michele Fioretti, 2022. "Caring or Pretending to Care? Social Impact, Firms' Objectives, and Welfare (former title: Social Responsibility and Firm's Objectives)," SciencePo Working papers Main hal-03393065, HAL.
    7. Atul Gupta & Sabrina T Howell & Constantine Yannelis & Abhinav Gupta, 2024. "Owner Incentives and Performance in Healthcare: Private Equity Investment in Nursing Homes," The Review of Financial Studies, Society for Financial Studies, vol. 37(4), pages 1029-1077.
    8. Paul Goldsmith-Pinkham & Maxim Pinkovskiy & Jacob Wallace, 2020. "Medicare and the Geography of Financial Health," Working Papers 2020-004, Human Capital and Economic Opportunity Working Group.
    9. Desai, Sunita M. & Padmanabhan, Prianca & Chen, Alan Z. & Lewis, Ashley & Glied, Sherry A., 2023. "Hospital concentration and low-income populations: Evidence from New York State Medicaid," Journal of Health Economics, Elsevier, vol. 90(C).
    10. Propper, Carol & Kunz, Johannes & Staub, Kevin & Winkelmann, Rainer, 2020. "Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?," CEPR Discussion Papers 15045, C.E.P.R. Discussion Papers.
    11. Antonio Estache & Ardit Litaj, 2023. "Is Private Equity Good for Health? Regulation and Competition Policy Lessons from a Survey of the Evidence," Working Papers ECARES 2023-01, ULB -- Universite Libre de Bruxelles.
    12. Cho, David D. & Stauffer, Jon M., 2022. "Tele-medicine question response service: Analysis of benefits and costs," Omega, Elsevier, vol. 111(C).
    13. Rabbani, Maysam, 2021. "Mergers with Future Rivals Can Boost Prices, Intensify Market Concentration, and Bar Entry," MPRA Paper 112864, University Library of Munich, Germany, revised 26 Apr 2022.
    14. Nathan E. Wilson, 2021. "The Impact of Competition on Investment: Evidence From California Hospitals," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 1-32, March.
    15. Rabbani, Maysam, 2023. "Mergers with future rivals can boost prices, bar entry, and intensify market concentration," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    16. Esra Eren Bayindir & Jonas Schreyögg, 2021. "What drives different treatment choices? Investigation of hospital ownership, system membership and competition," Health Economics Review, Springer, vol. 11(1), pages 1-14, December.
    17. Johannes S. Kunz & Carol Propper & Kevin E. Staub & Rainer Winkelmann, 2023. "Assessing the Quality of Public Services: For-profits, Chains, and Concentration in the Hospital Market," Papers 2023-01, Centre for Health Economics, Monash University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Capps, Cory S. & Carlton, Dennis W. & David, Guy, 2010. "Antitrust Treatment of Nonprofits: Should Hospitals Receive Special Care?," Working Papers 232, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    2. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    3. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    4. Zack Cooper & Stuart V Craig & Martin Gaynor & John Van Reenen, 2019. "The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 51-107.
    5. Tomas J. Philipson & Richard A. Posner, 2009. "Antitrust in the Not-for-Profit Sector," Journal of Law and Economics, University of Chicago Press, vol. 52(1), pages 1-18, February.
    6. Stuart V. Craig & Matthew Grennan & Ashley Swanson, 2021. "Mergers and marginal costs: New evidence on hospital buyer power," RAND Journal of Economics, RAND Corporation, vol. 52(1), pages 151-178, March.
    7. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    8. R. Halbersma & M. Mikkers & E. Motchenkova & I. Seinen, 2011. "Market structure and hospital–insurer bargaining in the Netherlands," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(6), pages 589-603, December.
    9. Thomas Koch & Shawn W. Ulrick, 2021. "Price Effects Of A Merger: Evidence From A Physicians' Market," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 790-802, April.
    10. Melnick, Glenn & Keeler, Emmett, 2007. "The effects of multi-hospital systems on hospital prices," Journal of Health Economics, Elsevier, vol. 26(2), pages 400-413, March.
    11. Lauren Russell, 2021. "Price Effects of Nonprofit College and University Mergers," The Review of Economics and Statistics, MIT Press, vol. 103(1), pages 88-101, March.
    12. Desai, Sunita M. & Padmanabhan, Prianca & Chen, Alan Z. & Lewis, Ashley & Glied, Sherry A., 2023. "Hospital concentration and low-income populations: Evidence from New York State Medicaid," Journal of Health Economics, Elsevier, vol. 90(C).
    13. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    14. Berden, Carolien & Croes, R. & Kemp, R. & Mikkers, Misja & van der Noll, Rob & Shestalova, V. & Svitak, Jan, 2019. "Hospital Competition in the Netherlands : An Empirical Investigation," Discussion Paper 2019-008, Tilburg University, Tilburg Law and Economic Center.
    15. Jean Marie Abraham & Martin Gaynor & William B. Vogt, 2007. "Entry And Competition In Local Hospital Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 265-288, June.
    16. Nathan E. Wilson, 2021. "The Impact of Competition on Investment: Evidence From California Hospitals," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 1-32, March.
    17. Janet Currie & Mehdi Farsi & W. Bentley Macleod, 2005. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," ILR Review, Cornell University, ILR School, vol. 58(3), pages 471-493, April.
    18. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    19. Leemore S. Dafny, 2005. "Estimation and Identification of Merger Effects: An Application to Hospital Mergers," NBER Working Papers 11673, National Bureau of Economic Research, Inc.
    20. Owsley, Kelsey M. & Lindrooth, Richard C., 2022. "Understanding the relationship between nonprofit hospital community benefit spending and system membership: An analysis of independent hospital acquisitions," Journal of Health Economics, Elsevier, vol. 86(C).

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:58:y:2020:i:3:p:1183-1199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.