The introduction of a quasi-market for long-term care services (LTCS) for the elderly in Japan brought numerous for-profit and non-profit providers to the market. The expectation is that market competition helps improve the efficiency and quality of public services. However, the actual implications of marketed public services for users have not yet been explored.

This study examines the differences in behavior between non-profit and for-profit providers of LTCS for group homes. Specifically, it investigates whether such providers compromise on quality and engage in strategic behaviors such as cream skimming to maximize profits by means of multiple regression analyses. Additionally, the study analyzes the relationship between business income and service quality or cream skimming.

The main results indicate that the service quality of non-profit providers is generally higher than that of for-profit providers, although the results depend on the index of service quality and the non-profit corporate status. Regarding group home facilities and the quality of care/nursing staff, the service quality of non-profit providers is higher than that of for-profit providers. The administrative performance evaluations of for-profit providers are better than those of non-profit providers.

Concerning business income, the providers of quality care staffing services appear to gain less income than low quality care staffing service providers. Service providers engaged in a higher degree of cream skimming gain more income than the others.