ANTITRUST TREATMENT OF NONPROFITS: SHOULD HOSPITALS RECEIVE SPECIAL CARE? |
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| Authors: | Cory S Capps Dennis W Carlton Guy David |
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| Institution: | 1. Bates White Economic Consulting, Washington, DC, 20006;2. David McDaniel Keller Professor of Economics, Booth School of Business, University of Chicago, Chicago, IL, 60637;3. Gilbert and Shelley Harrison Professor of Health Care Management, Wharton School of Business, University of Pennsylvania, Philadelphia, PA, 19104 |
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| 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) |
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