The effects of ownership on the economic performance of hospitals

Will for-profit hospitals improve the efficiency in Japanese healthcare sector?

Abstract

Recently some people advocate for-profit hospitals which are not approval should be authorized in Japan. They emphasize the profit motive improves the economic performance of hospitals. Then I try to examine the differences in the efficiency between for-profit and nonprofit hospitals by survey of the comparative studies in the United States. Although there is a common belief that for-profit hospitals are more efficient or less costly than are nonprofit hospitals, these studies of hospitals provide no evidence to support it. Moreover many studies show for-profit hospitals are more likely to avoid unprofitable patients in cream-skimming way. These studies imply to support the hypothesis that for-profit status are more likely to take opportunistic behaviors in information asymmetry market. From the result of this survey and a careful observation about Japanese healthcare, I conclude that an approval of for-profit hospitals will not contribute to improve the efficiency in Japanese healthcare sector and may cause new problems; unfair competition, unstable supply for service etc.