2016
DOI: 10.1016/j.jhealeco.2016.02.003
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Cost versus control: Understanding ownership through outsourcing in hospitals

Abstract: For-profit hospitals in California contract out services much more intensely than either private nonprofit or public hospitals. To explain why, we build a model in which the outsourcing decision is a trade-off between net revenues and some non-monetary benefit to the manager, or "bias" in the manner of production. Since nonprofit firms must consume profits under restrictions, they trade off bias and income differently than forprofit firms. This difference is exaggerated in services where the benefits of contro… Show more

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Cited by 18 publications
(14 citation statements)
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References 29 publications
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“…Many hospitals worldwide, and in Sweden, are facing economic restrictions (Swedish Association of Local Authorities and Regions (SALAR), 2016; Tan et al, 2012;Dalton and Warren, 2016;Santamaria and Santamaria, 2014) and changes in the leadership landscape. Economic status and leadership influence health care resources (Dalton and Warren, 2016;Kardakis et al, 2014). Staffing rates and teamwork are factors that have been directly linked to patient safety and quality of care (Subriana et al, 2014;Van Sluisveld et al, 2015).…”
Section: Discussionmentioning
confidence: 99%
“…Many hospitals worldwide, and in Sweden, are facing economic restrictions (Swedish Association of Local Authorities and Regions (SALAR), 2016; Tan et al, 2012;Dalton and Warren, 2016;Santamaria and Santamaria, 2014) and changes in the leadership landscape. Economic status and leadership influence health care resources (Dalton and Warren, 2016;Kardakis et al, 2014). Staffing rates and teamwork are factors that have been directly linked to patient safety and quality of care (Subriana et al, 2014;Van Sluisveld et al, 2015).…”
Section: Discussionmentioning
confidence: 99%
“…Systems with different types of ownership (eg, public or investor) may have varying missions that are manifested in part through differing approaches to physician integration. 15 For example, systems with public ownership might aim to provide access to essential services to disadvantaged populations by integrating providers who offer those services into their system. Prominent motivations for physicians to join systems include stagnant or declining reimbursements, the rising burdens of running an independent practice, and a desire for better work-life balance.…”
Section: What This Study Addsmentioning
confidence: 99%
“…Little empirical research in the field of health care management has explored sectoral differences in diverse processes and outcomes of health care. Despite recent studies about the difference between public and nonpublic systems of health care [9][10][11][12], they have paid little attention to what characteristics are associated with the sectoral variances in health care outcomes. They have mainly focused on simple sectoral differences, rather than on specific sectoral variances of ownership, control, and evaluation.…”
Section: Expanded Theories On Publicness and Organizational Formmentioning
confidence: 99%
“…On the other hand, a lack of financial accountability allows nonprofit and government hospitals to be less efficient than for-profit hospitals [9]. Ownership status in health care organizations may involve different practices of cost management and control mechanisms in contracting out management [10]. In addition, hospital ownership may influence the type of clinical practice [11] and generate differences in health care like bariatric surgery [12].…”
Section: Expanded Theories On Publicness and Organizational Formmentioning
confidence: 99%