Financial Incentives and Competitive Pressure: The Case of the Hospital Industry

2021 ◽  
Author(s):  
Philippe Choné ◽  
Lionel Wilner
Keyword(s):  
Financial Incentives ◽  
Regulatory Reform ◽  
Hospital Industry ◽  
Competitive Pressure ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Industry Level ◽  
Market Shares

Abstract In the late 2000s, a regulatory reform dramatically strengthened the incentives of French nonprofit hospitals to attract patients. Exploiting exhaustive data for surgery treatments between 2005 and 2008, and modeling hospitals as supplying utility to patients, we show that increased competitive pressure on nonprofit hospitals caused them to perform more procedures, but did not inflate overall activity at the industry level. Although they have gained market shares over their for-profit counterparts, nonprofit hospitals have been significantly worse off after the reform. To adjust to stronger financial incentives, they incurred an additional effort (pecuniary and non-pecuniary costs) equivalent to about a quarter of their annual revenue.

scholarly journals Management Accounting and Control in the Hospital Industry: A Review

2017 ◽  
Vol 6 (1) ◽  
pp. 52-91 ◽  
Author(s):  
Leslie G. Eldenburg ◽  
Hema A. Krishnan ◽  
Ranjani Krishnan
Keyword(s):  
Unique Feature ◽  
Management Accounting ◽  
Institutional Constraints ◽  
Hospital Industry ◽  
Grand Theory ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Regulatory Changes ◽  
Operating Constraints ◽  
And Control

ABSTRACT This paper presents an overview of the literature in management accounting and control systems (MACS) in the hospital industry. A unique feature of the hospital industry in several countries is not only the coexistence of different ownership forms (such as nonprofit, for-profit, and government), but also diversity within a specific form (such as religious, secular, and university nonprofit hospitals). Organizational objectives and the operating constraints faced by various types of hospitals differ in this “mixed” industry. As a result, one unifying or grand theory is unlikely to provide sufficient insights to understand hospital behavior, especially with respect to MACS design and outcomes. Additionally, the industry has witnessed a variety of regulatory changes, which are primarily aimed at reducing healthcare costs and increasing access. These regulatory changes influence every aspect of MACS. Finally, hospitals face institutional constraints, which have implications for MACS design and use. We review the MACS literature in the hospital industry and identify opportunities for future accounting research.

The Conversion Conundrum: The State and Federal Response to Hospitals’ Changes in Charitable Status

1997 ◽  
Vol 23 (2-3) ◽  
pp. 221-250
Author(s):  
Lawrence E. Singer
Keyword(s):  
Joint Venture ◽  
Low Cost ◽  
State Level ◽  
The State ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Tax Exempt ◽  
Federal Response ◽  
Profit Status ◽  
Hospital Conversions

The pressures encountered by hospitals in the current era of reimbursement declines and stiffened competition are well known. As the “ultimate” payors—primarily employers and government—aggressively continue to seek low cost care, the response of the hospital industry has been to move toward consolidation and efficiency-enhancing mechanisms.Increasingly, nonprofit, tax-exempt hospitals have come to believe that they are at a significant disadvantage vis-á-vis their for-profit brethren in their ability to attract the capital needed to compete in the market. A growing trend among nonprofit hospitals, therefore, is to sell to or enter into a joint venture with a proprietary organization, or alternatively to convert to for-profit status. In 1995, fifty-eight nonprofit hospitals became for-profit; hospital conversions to for-profit status in 1996 are projected to outstrip the pace established the prior year.The conversion trend has not gone unnoticed at the state level. Recently, several states have proposed or enacted laws regulating sales and conversions of nonprofit hospitals, and many more states are contemplating such legislation.

scholarly journals Competition between Public and Private Maternity Care Providers in France: Evidence on Market Segmentation

2020 ◽  
Vol 17 (21) ◽  
pp. 7846
Author(s):  
Daniel Herrera-Araujo ◽  
Lise Rochaix
Keyword(s):  
Hospital Competition ◽  
Care Providers ◽  
Data Set ◽  
Public And Private ◽  
User Choice ◽  
Hospital Markets ◽  
For Profit ◽  
Market Shares ◽  
French Case ◽  
Sources Of Variation

The purpose of this paper is to investigate the potential for segmentation in hospital markets, using the French case where private for-profit providers play an important role having nearly 25% of market shares, and where prices are regulated, leading to quality competition. Using a stylized economic model of hospital competition, we investigate the potential for displacement between vertically differentiated public and private providers, focusing on maternity units where user choice is central. Building over the model, we test the following three hypotheses. First, the number of public maternity units is likely to be much larger in less populated departments than in more populated ones. Second, as the number of public maternity units decreases, the profitability constraint should allow more private players into the market. Third, private units are closer substitutes to other private units than to public units. Building an exhaustive and nationwide data set on the activity of maternity services linked to detailed data at a hospital level, we use an event study framework, which exploits two sources of variation: (1) The variation over time in the number of maternity units and (2) the variation in users’ choices. We find support for our hypotheses, indicating that segmentation is at work in these markets with asymmetrical effects between public and private sectors that need to be accounted for when deciding on public market entry or exit.

scholarly journals Helping Yourself or Others? Motivation Dynamics for High-Performing Volunteers in GLAM Crowdsourcing

2020 ◽  
Vol 24 ◽  
Author(s):  
Sultana Lubna Alam ◽  
Ruonan Sun ◽  
John Campbell
Keyword(s):  
Financial Incentives ◽  
Incentive Structure ◽  
Open Communication ◽  
Non Profit ◽  
High Performing ◽  
For Profit ◽  
Not For Profit ◽  
Over Time

While most crowdsourcing (CS) cases in the literature focus on commercial organisations, little is known about volunteers’ motivation of initial and continued participation in not-for-profit CS projects and importantly, about how the motivations may change over time. It is vital to understand motivation and motivational dynamics in a not-for-profit context because a fundamental challenge for not-for-profit CS initiations is to recruit and keep volunteers motivated without any formal contract or financial incentives. To tackle this challenge, we explore high performing volunteers’ initial motivation for joining and sustaining with a GLAM (galleries, libraries, archives and museums) CS project. We situated our interpretive exploration in a case study of the Australian Newspapers CS project initiated by the National Library of Australia. Based on the case study, we found that high-performing volunteers were motivated by a combination of personal, collective, and external factors classified into intrinsic, extrinsic, and internalised extrinsic motivations. Further, we found that these motivations changed over time. Specifically, many volunteers presented substantial personal (i.e., personal interest and fun) and community-centric motivations (i.e. altruism and non-profit cause) when they initially joined the project, whereas external motivations (i.e., recognition and rewards) had a greater impact on long-term participation. Our findings offer implications for CS system design (e.g., user profiles, tagging and commenting), incentive structure (e.g., reputation-based ranking, leader boards), and relational mechanisms (e.g., open communication channels) to stimulate sustainable contributions for not-for-profit CS initiatives.

scholarly journals For-Profit Hospitals Have a Unique Opportunity to Serve as Anchor Institutions in the U.S.

2020 ◽  
Author(s):  
Cory E. Cronin ◽  
Berkeley Franz ◽  
Kelly Choyke ◽  
Vanessa Rodriguez ◽  
Brian K. Gran
Keyword(s):  
Rural Communities ◽  
Public Hospitals ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Vulnerable Communities ◽  
Anchor Institutions ◽  
Current State ◽  
Reporting Mechanism ◽  
Significant Opportunity ◽  
The U.S

Abstract Background Hospitals serve as anchor institutions in many U.S. communities and make contributions to bolster population health and reduce preventable death. Most studies to date have focused on nonprofit hospitals, but there may be significant opportunity for for-profits to fill this role in both urban and rural communities. Methods We calculated descriptive statistics and a multivariate regression model to assess economic and health characteristics for all U.S. counties that contain for-profit as compared to nonprofit or public hospitals. Results For-profit hospitals are more likely to be located in counties with higher uninsurance rates and lower self-rated health. After controlling for hospital and county characteristics, we found a significant and positive relationship between for-profit hospital presence and higher county unemployment, higher uninsured rates, and the number of residents reporting poor/fair health. For-profit hospitals were also less likely to be located in states that had expanded Medicaid or which had certificate-of-need laws. Conclusions There is substantial opportunity for for-profit hospitals to serve as anchor institutions in many U.S. communities, despite this label more traditionally being applied to nonprofit hospitals. Given that there is not currently a regular reporting mechanism for documenting the community health contributions of for-profit hospitals, policymakers and researchers should evaluate the current state of these contributions and develop incentives to encourage more anchor activities to benefit economically vulnerable communities in the U.S.

An Examination of Joint Ventures between Nonprofit Hospitals and For-Profit Businesses

2003 ◽  
Vol 1 (1) ◽  
pp. 41-53 ◽  
Author(s):  
Kent Swift
Keyword(s):  
Board Of Directors ◽  
Joint Ventures ◽  
Joint Venture ◽  
Court Cases ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Tax Exempt

Nonprofit hospitals have increasingly found that it is to their advantage to enter into joint ventures with for-profit entities as a means of raising capital and/or obtaining expertise. A number of IRS letter rulings, revenue rulings, and court cases have addressed the issue of the types of joint ventures between nonprofit hospitals and for-profit entities that are within the hospital's charitable mission and those joint ventures that cross the line and would cause the hospital to lose its status as a tax-exempt entity under I.R.C. §501(c)(3). An examination of this literature suggests that nonprofit hospitals can avoid jeopardizing their charitable status when entering into joint ventures with for-profit entities by (1) requiring the joint venture operating entity to provide care to a broad segment of the community; (2) maintaining control over the joint venture, preferably by controlling a majority of the positions on the operating entity's board of directors; and (3) crafting joint venture agreements such that they place primary importance on the venture's charitable mission.

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