COMMERCIALISM IN NONPROFIT HOSPITALS

The private nonprofit hospital is the dominant organizational form in the U.S. hospital industry. Various reasons have been advanced for its high market share, As hospitals undergo massive changes due in large part to changes in payment practices, there is widespread concern that nonprofit hospitals may become less committed to noncommercial activi ties. This may even be more likely when such hospitals convert to non- profit status. The empirical evidence indicates that, on average, hosp itals of nonprofit and for-profit ownership are similar in the provisi on of uncompensated care, the quality of care, and the adoption of tec hnology. Conversion of a nonprofit to for-profit status does not adver sely affect the provision of uncompensated cave on average. However, f or-profits are more likely to be located in areas where consumers have the ability to pay for care. As hospital markets become more competit ive and the opportunity for cross-subsidizing more unprofitable, colle ctive-good activities will become increasingly difficult. Support for such activities, if they are to exist, will have to come from explicit public subsidies.