The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions

Abstract

Do not-for-profit hospitals provide better care than for-profit hospitals?We compare patient outcomes in for-profit and not-for-profit hospitals between 1984 and 1994 using a new method for estimating differences across hospitals that yields far more accurate estimates of hospital quality than previously available.We find that, on average, for-profit hospitals have higher mortality among elderly patients with heart disease, and that this difference has grown over the last decade.However, much of the difference appears to be associated with the location of for-profit hospitals.Within specific markets, forprofit ownership appears if anything to be associated with better quality care.Moreover, the small average difference in mortality between for-profit and not-for-profit hospitals masks an enormous amount of variation in mortality within each of these ownership types.Overall, these results suggest that factors other than for-profit status per se may be the main determinants of quality of care in hospitals.

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