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ANTITRUST TREATMENT OF NONPROFITS: SHOULD HOSPITALS RECEIVE SPECIAL CARE?
Author(s) -
Capps Cory S.,
Carlton Dennis W.,
David Guy
Publication year - 2020
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12881
Subject(s) - subsidy , market power , uncompensated care , tax exemption , competition (biology) , business , economics , for profit , managed care , public economics , finance , health care , microeconomics , medicaid , monopoly , market economy , political science , law , economic growth , ecology , biology
Nonprofit hospitals receive favorable tax treatment in exchange for providing socially beneficial activities. Extending this rationale suggests that nonprofit hospital mergers should be evaluated differently than mergers of for‐profit hospitals because suppression of competition may also allow nonprofits to cross‐subsidize care for the poor. Using detailed California data, we find no evidence that nonprofit hospitals are more likely than for‐profit hospitals to provide more charity care or offer unprofitable services in response to an increase in market power. Therefore, we find no empirical justification for applying, as some courts have suggested, different antitrust standards for nonprofit hospitals. ( JEL I11, L1, L44)