How do nonprofits respond to negative wealth shocks? The impact of the 2008 stock market collapse on hospitals

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

The theory of cost shifting posits that nonprofit firms “share the pain” of negative financial shocks with their stakeholders, for example, by raising prices. We examine how nonprofit hospitals responded to the sharp reductions in their assets caused by the 2008 stock market collapse. The average hospital did not raise prices, but hospitals with substantial market power did cost shift in this way. We find no evidence that hospitals reduced treatment costs. Hospitals eliminated but left unchanged their offerings of profitable services. Taken together, our results provide mixed evidence on whether nonprofits behave differently from for-profits.

Original languageEnglish (US)
Pages (from-to)485-525
Number of pages41
JournalRAND Journal of Economics
Volume48
Issue number2
DOIs
StatePublished - Jun 1 2017

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'How do nonprofits respond to negative wealth shocks? The impact of the 2008 stock market collapse on hospitals'. Together they form a unique fingerprint.

  • Cite this