Do religious nonprofit and for-profit organizations respond differently to financial incentives? The hospice industry

Richard C. Lindrooth; Burton A. Weisbrod

doi:10.1016/j.jhealeco.2006.09.003

Do religious nonprofit and for-profit organizations respond differently to financial incentives? The hospice industry

Richard C. Lindrooth^*, Burton A. Weisbrod

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

58 Scopus citations

Abstract

We study how for-profit and religious nonprofit hospices respond to an exogenous Medicare reimbursement incentive that encourages maximization of patient length of stay. Hospices have the incentive to selectively admit patients with longer expected lengths of stay, and admit patients sooner after a hospital discharge. We find that for-profit hospices are significantly less likely to admit patients with shorter, less profitable, expected lengths of stay. We do not find any difference in the timing of admission by ownership. Incentives for efficiency could be strengthened by a Medicare pricing system that replaced the current flat per diem payment with one that reflected the high costs at the beginning and end of hospice stay and the lower costs in between.

Original language	English (US)
Pages (from-to)	342-357
Number of pages	16
Journal	Journal of Health Economics
Volume	26
Issue number	2
DOIs	https://doi.org/10.1016/j.jhealeco.2006.09.003
State	Published - Mar 1 2007

Funding

We thank Nicholas Christakis, who graciously provided the data used in this paper. In addition, we thank Richard Arnould, Susan Ettner, Haiden Huskamp, Robert Town, Courtney Van Houtven, and Peter Zweifel, participants of the 15th Annual Health Economics Conference in Birmingham, AL, the 2004 AEA Annual Meetings, and the 2004 Academy Health Annual Meetings. We thank the Editor and a referee for very helpful comments on earlier drafts of this paper. Discussions with David Bradford and Joe Terza also served to improve this paper. Weisbrod thanks the Robert Wood Johnson Foundation Investigator Awards Program and The Atlantic Philanthropies for research support.

Keywords

Hospice care
Long-term care
Medicare
Nonprofit hospices
Ownership differences

ASJC Scopus subject areas

Health Policy
Public Health, Environmental and Occupational Health

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10.1016/j.jhealeco.2006.09.003

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abstract = "We study how for-profit and religious nonprofit hospices respond to an exogenous Medicare reimbursement incentive that encourages maximization of patient length of stay. Hospices have the incentive to selectively admit patients with longer expected lengths of stay, and admit patients sooner after a hospital discharge. We find that for-profit hospices are significantly less likely to admit patients with shorter, less profitable, expected lengths of stay. We do not find any difference in the timing of admission by ownership. Incentives for efficiency could be strengthened by a Medicare pricing system that replaced the current flat per diem payment with one that reflected the high costs at the beginning and end of hospice stay and the lower costs in between.",

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Do religious nonprofit and for-profit organizations respond differently to financial incentives? The hospice industry

Abstract

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Keywords

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