Meeting on not-for-profit hospitals.

The NBER held a discussion of not-for-profit hospitals, organized by David M. Cutler of NBER and Harvard University, at its Cambridge office on May 16. The agenda was:

Frank A. Sloan, NBER and Duke University, "Research on Not-for-Profit and For-Profit Hospitals"

Richard Frank, NBER and Harvard University, "Making Investment Decisions in Not-for-Profit Hospitals"

Martin Gaynor, NBER and Carnegie-Mellon University, "The Changing Structure of Health Care Markets and Antitrust Policy"

Thomas Lee, Partners' Health Care, "Organization, Incentives, and Medical Practice: Partners' Health Care" Panel: "Measuring the Quality of Care in Hospitals"

Arnold Epstein, Harvard University, and Howard Hiatt, Brigham and Women's Hospital

The first three speakers at the meeting focused on the differences between for-profit and not-for-profit hospitals. Frank Sloan and Richard Frank discussed why we have both for-profit and not-for-profit hospitals, and asked whether being for-profit versus not-for-profit leads to any difference in behavior. Martin Gaynor extended the discussion to the issue of antitrust and consolidation among hospitals. Again, if there is a difference between for-profits and notfor-profits, should the government regulate mergers differently depending on the financial structure of the hospitals involved? In the end, the speakers agreed that on most dimensions, there is very little difference between for-profit and not-for-profit hospitals. To the extent that differences exist, they are in the areas of financing and location choice. In the areas of patient care, access, and abuse of market power, there is little economic evidence suggesting a significant difference.

The consensus among the participants at the meeting was that forprofit and not-for-profit hospitals act in essentially the same way in today's market. They are similar in their provision of care, quality of care, and technology offered. (Public hospitals are a different entity: they provide charity care. For-profit hospitals tend to locate where they will not have to provide charity care.) One major difference, though, is that not-for-profit hospitals cannot raise capital as easily as for-profits: they are forced to rely on philanthropy as their major source of new capital.

Doctors

The last three speakers at the meeting were physicians invited to discuss how the changes in the medical industry were affecting the ways that doctors provide care and interact with hospitals and...