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  • Title: The economics of for-profit and not-for-profit hospitals.
    Author: Reinhardt UE.
    Journal: Health Aff (Millwood); 2000; 19(6):178-86. PubMed ID: 11192401.
    Abstract:
    This paper examines the economics of for-profit and not-for-profit hospitals through the prism of capital acquisitions. The exercise suggests that of two hospitals that are equally efficient in producing health care, the for-profit hospital would have to charge higher prices than the not-for-profit hospital would, to break even on capital acquisitions. The reasons for this divergence are (1) the typically higher cost of equity capital that for-profit hospitals face; and (2) the income taxes they must pay. The paper recommends holding tax-exempt hospitals more formally accountable for the social obligation they shoulder, in return for their tax preference.
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