The impact of ownership form and regulatory measures on firm behavior: a study of hospices

Abstract

This article examines differential responses to the Medicare hospice benefit across ownership types. The analysis reveals little difference in costs or quality of service among government-owned, for-profit, and nonprofit hospices. However, there are significant differences in the numbers of patients served by ownership status. The results are consistent with the hypothesis that nonprofit hospices are patient maximizers, not profit maximizers in disguise who are aiming to circumvent the nondistribution constraint. A comparison of these results with those in the hospital and nursing home industries leads to the conclusion that Medicare regulations and the predominance of Medicare revenues in an industry induce similar outcomes in cost and quality across ownership types.