Hospital Ownership and Financial Performance: A Quantitative Research Review

Yu-Chu Shen, Karen Eggleston, Joseph Lau, Christopher Schmid

NBER Working Paper No. 11662
Issued in October 2005
NBER Program(s):   HC

We apply meta-analytic methods to conduct a quantitative review of the empirical literature since 1990 comparing financial performance of US for-profit, not-for-profit, and government-owned general acute hospitals. We find that the diverse results in the hospital ownership literature can be explained largely by differences in authors' underlying theoretical frameworks, assumptions about the functional form of the dependent variables, and model specifications. Weaker methods and functional forms tend to predict larger differences in financial performance between not-for-profits and for-profits. The combined estimates across studies suggest little difference in cost among all three types of hospital ownership, and that for-profit hospitals generate more revenue and greater profits than not-for-profit hospitals, although the difference is only of modest economic significance. There is little difference in revenue or profits between government and not-for-profit hospitals.

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This paper was revised on June 29, 2006

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