Volume 31, Number 3 (Summer) 1996
Mark, Tami L. 1996. "Psychiatric Hospital Ownership and Performance: Do Nonprofit Organizations Offer Advantages in Markets Characterized by Asymmetric Information?" Journal of Human Resources 31(3):631-649.
Nonprofit organizations have been hypothesized as being preferable to for-profit organizations in markets characterized by asymmetric information, such as the market for mental health care services. This paper empirically examines whether ownership affects the quality of private psychiatric hospital care. A quality deviation function and a frontier cost function are specified and estimated using data on psychiatric hospitals in California for the years 1984-1989. The results suggest that nonprofit hospitals may provide protection against asymmetric information relative to their for-profit counterparts. No difference in efficiency was found by ownership.
Tami L. Mark, Ph.D., M.B.A., is with the Project HOPE Center for Health Affairs, 7500 Old Georgetown Road, Suite 600, Bethesda. MD 20814. The data used in this article can be obtained beginning in November 1996 through October 1999 from the author. This study was supported by the Indiana Center on Philanthropy and the National Institute of Mental Health. It also benefited from the comments of Drs. Martin Gaynor and Richard Frank, the participants at the Indiana Seminar on the Governance of Nonprofit Organizations, the Northeast Regional Research Symposium, and two anonymous reviewers.
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