Variations in Hospital Cost by Types of Ownership

In the U.S. there are 5,935 nonfederal short-term general and other special hospitals. Of these hospitals, 3,360 are not-for-profit accounting for 70% of all admissions to nonfederal short-term general and other special hospitals. Due to the predominance of this form of ownership, hospital cost research has concentrated on not-for-profit hospitals (Berki, 1972). Only a few studies have attempted to compare the cost behavior of short-term general and other special hospitals by types of ownership. This is somewhat surprising given the fact that most economists believe that nonprofit hospitals are inefficient because they lack the incentive to act in a cost effective manner (Jacobs, 1974).