Public expectations of nonprofit and for-profit ownership in American medicine: Clarifications and implications

Health Affairs

Volumn 23, Issue 6, 2004, Pages 181-191

  Schlesinger, Mark ^a   Mitchell, Shannon ^b   Gray, Bradford H ^b  

^a Rutgers University   (United States)

^b YALE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

HEALTH CARE; HEALTH CARE DELIVERY; HEALTH CARE ORGANIZATION; HEALTH CARE PLANNING; HEALTH CARE POLICY; HEALTH CARE QUALITY; HUMAN; MEDICAL CARE; REVIEW; UNITED STATES;

DELIVERY OF HEALTH CARE; FINANCING, PERSONAL; HEALTH EXPENDITURES; HEALTH SERVICES RESEARCH; HUMANS; OWNERSHIP; PUBLIC OPINION; QUALITY OF HEALTH CARE;

EID: 8844270250     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.23.6.181     Document Type: Review

References (32)

1. See M. Schlesinger and B.H. Gray, "Nonprofit Organizations and Health Care: The Paradox of Persistent Attention," in The Nonprofit Sector: A Research Handbook, 2d ed., ed. W.W. Powell and R. Steinberg (New Haven, Conn.: Yale University Press, 2004). Also, compare A. Malani, T. Philpson, and G. David, "Theories of Firm Behavior in the Nonprofit Sector: A Synthesis and Empirical Evaluation," in The Governance of Not-for-Profit Organizations, ed. E. Glaeser (Chicago: University of Chicago Press, 2003), 181-215; with J. Needleman, "The Role of Nonprofits in Health Care," Journal of Health Politics, Policy and Law 26, no. 5 (2001): 1113-1130.
2. See M. Schlesinger and B.H. Gray, "Nonprofit Organizations and Health Care: The Paradox of Persistent Attention," in The Nonprofit Sector: A Research Handbook, 2d ed., ed. W.W. Powell and R. Steinberg (New Haven, Conn.: Yale University Press, 2004). Also, compare A. Malani, T. Philpson, and G. David, "Theories of Firm Behavior in the Nonprofit Sector: A Synthesis and Empirical Evaluation," in The Governance of Not-for-Profit Organizations, ed. E. Glaeser (Chicago: University of Chicago Press, 2003), 181-215; with J. Needleman, "The Role of Nonprofits in Health Care," Journal of Health Politics, Policy and Law 26, no. 5 (2001): 1113-1130.
3. See M. Schlesinger and B.H. Gray, "Nonprofit Organizations and Health Care: The Paradox of Persistent Attention," in The Nonprofit Sector: A Research Handbook, 2d ed., ed. W.W. Powell and R. Steinberg (New Haven, Conn.: Yale University Press, 2004). Also, compare A. Malani, T. Philpson, and G. David, "Theories of Firm Behavior in the Nonprofit Sector: A Synthesis and Empirical Evaluation," in The Governance of Not-for-Profit Organizations, ed. E. Glaeser (Chicago: University of Chicago Press, 2003), 181-215; with J. Needleman, "The Role of Nonprofits in Health Care," Journal of Health Politics, Policy and Law 26, no. 5 (2001): 1113-1130.
4. M.G. Bloche, "Should Government Intervene to Protect Nonprofits?" Health Affairs 17, no. 5 (1998): 7-26 (quote, page 9).
5. S. Woolhandler et al., "Proposal of the Physicians' Working Group for Single-Payer National Health Insurance," Journal of the American Medical Association 290, no. 6 (2003): 798-805.
6. The first quote is from F. Sloan, "Commercialism in Nonprofit Hospitals," in To Profit or Not to Profit: The Commercial Transformation of the Nonprofit Sector, ed. B. Weisbrod (New York: Cambridge University Press, 1998), 151-168 (quote, p. 167). The second is from M. Orloff, "A Perspective from the National Blue Cross and Blue Shield Organizations," Bulletin of the New York Academy of Medicine 74, no. 2 (1997): 286-291 (quote, p. 290).
7. The first quote is from F. Sloan, "Commercialism in Nonprofit Hospitals," in To Profit or Not to Profit: The Commercial Transformation of the Nonprofit Sector, ed. B. Weisbrod (New York: Cambridge University Press, 1998), 151-168 (quote, p. 167). The second is from M. Orloff, "A Perspective from the National Blue Cross and Blue Shield Organizations," Bulletin of the New York Academy of Medicine 74, no. 2 (1997): 286-291 (quote, p. 290).
8. Towers Perrin, Navigating the Changing Healthcare System: The Towers Perrin Survey of What Americans Know and Need to Know (New York: Louis Harris, 1995).
9. See, for example, B.H Gray, ed., The New Health Care for Profit: Doctors and Hospitals in a Competitive Environment (Washington: National Academies Press, 1983); and B.H. Gray, ed., For-Profit Enterprise in Health Care (Washington: National Academies Press, 1986).
10. See, for example, B.H Gray, ed., The New Health Care for Profit: Doctors and Hospitals in a Competitive Environment (Washington: National Academies Press, 1983); and B.H. Gray, ed., For-Profit Enterprise in Health Care (Washington: National Academies Press, 1986).
11. All survey questions that are not cited in a publication are from the archives of the Roper Center for Public Opinion Research at the University of Connecticut. Specific questions from the Roper Center are identified by their identification numbers - in this case, Question USROPER. 86-7 .R52X.
12. R. Kuttner, "Columbia/HCA and the Resurgence of the For-Profit Hospital Business," New England Journal of Medicine 335, no. 5 (1996): 362-367 (quote, p. 362).
13. Quality was expected to be higher in nonprofit settings because administrators will pursue quality rather than a financial "bottom line" (J.P. Newhouse, "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review 60, no. 1 [1970]: 64-74) and have less incentive to mislead customers by shirking on quality (K. Arrow, "Uncertainty and the Welfare Economics of Medical Care," American Economic Review 58, no. 4 [1963]: 941-969). Costs were expected to be higher in nonprofits because administrators had incentives to build overly large physical plants (M.L. Lee, "A Conspicuous Production Theory of Hospital Behavior," Southern Economic Journal 38, no. 1 [1971]: 48-58) and less incentive to motivate workers (A. Alchian and H. Demsetz, "Production, Information Costs, and Economic Organization," American Economic Review 62, no. 3 [1972]: 777-795).
14. Quality was expected to be higher in nonprofit settings because administrators will pursue quality rather than a financial "bottom line" (J.P. Newhouse, "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review 60, no. 1 [1970]: 64-74) and have less incentive to mislead customers by shirking on quality (K. Arrow, "Uncertainty and the Welfare Economics of Medical Care," American Economic Review 58, no. 4 [1963]: 941-969). Costs were expected to be higher in nonprofits because administrators had incentives to build overly large physical plants (M.L. Lee, "A Conspicuous Production Theory of Hospital Behavior," Southern Economic Journal 38, no. 1 [1971]: 48-58) and less incentive to motivate workers (A. Alchian and H. Demsetz, "Production, Information Costs, and Economic Organization," American Economic Review 62, no. 3 [1972]: 777-795).
15. Quality was expected to be higher in nonprofit settings because administrators will pursue quality rather than a financial "bottom line" (J.P. Newhouse, "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review 60, no. 1 [1970]: 64-74) and have less incentive to mislead customers by shirking on quality (K. Arrow, "Uncertainty and the Welfare Economics of Medical Care," American Economic Review 58, no. 4 [1963]: 941-969). Costs were expected to be higher in nonprofits because administrators had incentives to build overly large physical plants (M.L. Lee, "A Conspicuous Production Theory of Hospital Behavior," Southern Economic Journal 38, no. 1 [1971]: 48-58) and less incentive to motivate workers (A. Alchian and H. Demsetz, "Production, Information Costs, and Economic Organization," American Economic Review 62, no. 3 [1972]: 777-795).
16. Quality was expected to be higher in nonprofit settings because administrators will pursue quality rather than a financial "bottom line" (J.P. Newhouse, "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review 60, no. 1 [1970]: 64-74) and have less incentive to mislead customers by shirking on quality (K. Arrow, "Uncertainty and the Welfare Economics of Medical Care," American Economic Review 58, no. 4 [1963]: 941-969). Costs were expected to be higher in nonprofits because administrators had incentives to build overly large physical plants (M.L. Lee, "A Conspicuous Production Theory of Hospital Behavior," Southern Economic Journal 38, no. 1 [1971]: 48-58) and less incentive to motivate workers (A. Alchian and H. Demsetz, "Production, Information Costs, and Economic Organization," American Economic Review 62, no. 3 [1972]: 777-795).
17. This is in part an artifact of survey design, since the Kaiser Family Foundation (KFF) surveys required respondents to volunteer this middle response.
18. See Kuttner, "Columbia/HCA."
19. Unpublished KFF data. The survey was fielded 7-10 August 1997. This is moderate public attention for a news event, ranking below attention to Medicare reform and roughly equal to awareness of the development of a new flu vaccine.
20. See B.H. Gray, The Profit Motive and Patient Care (Cambridge, Mass.: Harvard University Press, 1992).
21. The public sees nonprofit hospitals as basing charges on a philanthropic mission. In 1986 respondents were asked whether for-profit hospitals were more or less likely "to provide health care to uninsured people who cannot afford to pay for the care provided." Sixty percent reported that for-profit hospitals would be less likely to do so (Roper ID Number: USCAMBREP.860CT.R165). For-profits may also exploit monopoly power to mark-up prices more than do nonprofits. See E.B. Keeler, G. Melnick, and J. Zwanziger, "The Changing Effects of Competition on Non-profit and For-Profit Hospital Pricing Behavior," Journal of Health Economics 18, no. 1 (1999): 69-86.
22. The survey asked about expectations for "health insurance plans including HMOs and other managed care plans."
23. See, for example, Needleman, "The Role of Nonprofits in Health Care"; and Sloan, "Commercialism in Nonprofit Hospitals."
24. See, for example, Needleman, "The Role of Nonprofits in Health Care"; and Sloan, "Commercialism in Nonprofit Hospitals."
25. Lest readers suspect that these negative assessments are the result of biased wording, the Wall Street Journal recently concluded from its own survey that "most of the public do not view health care as a business which should be driven by the profit motive...There is little appetite for businesses to run home care, health insurance, nursing homes, hospitals, or medical research." Harris Interactive, "Most People Uncomfortable with Profit Motive in Health Care," Harris Interactive 2, no. 12 (2004): 1.
26. Lest readers suspect that these negative assessments are the result of biased wording, the Wall Street Journal recently concluded from its own survey that "most of the public do not view health care as a business which should be driven by the profit motive...There is little appetite for businesses to run home care, health insurance, nursing homes, hospitals, or medical research." Harris Interactive, "Most People Uncomfortable with Profit Motive in Health Care," Harris Interactive 2, no. 12 (2004): 1.
27. This question was a part of a survey conducted in the summer of 1996 by Princeton Survey Research Associates. The question cited in the text has the Roper Center identification number USPSRA.073086,R05H.
28. M.A. Hall et al., "Trust in Physicians and Medical Institutions: What Is It, Can It Be Measured, and Does It Matter?" Milbank Quarterly 79, no. 3 (2001): 613-639.
29. S. Rose-Ackerman, "Altruism, Ideological Entrepreneurs, and the Non-Profit Firm," Voluntas 8, no. 2 (1997): 120-135.
30. S. Smith and M Lipsky, Nonprofits for Hire: The Welfare State in the Age of Contracting (Cambridge, Mass.: Harvard University Press, 1993).
31. To meet some other study objectives, we over-sampled communities in which there was a mix of ownership for hospitals and health plans: About 85 percent of our sample had local exposure to both forms of ownership.
32. See A. Ortmann and M. Schlesinger, "Trust, Repute, and the Role of Nonprofit Enterprise," Voluntas 8, no. 2 (1997): 97-119.