Philanthropy and hospital financing.
OBJECTIVE
This study explores the relationships among donations to not-for-profit hospitals, the returns provided by these hospitals, and fund-raising efforts. It tests a model of hospital behavior and addresses an earlier debate regarding the supply price of donations.


METHODS
The main data source is the California Office of Statewide Health Planning data tapes of hospital financial disclosure reports for fiscal years 1980/1981 through 1986/1987. Complete data were available for 160 hospitals.


METHODS
Three structural equations (donations, returns, and fund-raising) are estimated as a system using a fixed-effects, pooled cross-section, time-series least squares regression.


RESULTS
Estimation results reveal the expected positive relation between donations and returns. The reverse relation between returns and donations is insignificant. The estimated effect of fund-raising on donations is insignificantly different from zero, and the effect of donations on fund-raising is negative. Fund-raising and returns are negatively associated with one another.


CONCLUSIONS
The empirical results presented here suggest a positive donations-returns relations and are consistent with a positive supply price for donations. Hospitals appear to view a trade-off between providing returns and soliciting donations, but donors do not respond equally to these two activities. Attempts to increase free cash flow through expansion of community returns or fund-raising activity, at least in the short run, are not likely to be highly successful financing strategies for many hospitals.
Department of Health Services Management and Policy, School of Public Health, University of Michigan, Ann Arbor 48104, USA.
D G
DG
Smith
J P
JP
Clement
J R
JR
Wheeler
D002140:California; D005377:Financial Management, Hospital / Q000379:methods* / Q000706:statistics & numerical data; D005653:Fund Raising / Q000706:statistics & numerical data*; D005102:Health Expenditures / Q000706:statistics & numerical data; D006302:Health Services Research; D006788:Hospitals, Voluntary / Q000191:economics* / Q000706:statistics & numerical data; D007182:Income / Q000706:statistics & numerical data; D017146:Models, Organizational