title: The economics of for-profit and not-for-profit hospitals.
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.
authors.affiliation: Princeton University, USA.
authors.forename: U E
authors.initials: UE
authors.lastname: Reinhardt
mesh_terms: D002201:Capital Expenditures / Q000706:statistics & numerical data; D005377:Financial Management, Hospital / Q000706:statistics & numerical data*; D006291:Health Policy; D017721:Hospital Costs / Q000706:statistics & numerical data; D006777:Hospitals, Proprietary / Q000191:economics*; D006788:Hospitals, Voluntary / Q000191:economics*; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D019464:Tax Exemption; D014481:United States