Institutional Drivers of Reporting Decisions in Nonprofit Hospitals

Authors


  • We thank Philip Berger (the editor), an anonymous reviewer, and workshop participants at Boston University, Georgia State University, Harvard University, University of Wisconsin at Madison, the 2009 Government and Nonprofit Section Annual meeting, and the 2009 AAA Annual meeting for their comments.

ABSTRACT

We examine the influence of normative and regulative institutional factors on cost shifting by nonprofit hospitals in their publicly reported statements. We explore whether normative constraints imposed by stakeholders, who prefer that nonprofit hospitals allocate their resources toward patient-related program services, influence the extent to which nonprofit hospitals shift costs toward program services and away from administrative and fundraising categories, thereby appearing more efficient. We also explore whether regulative factors, such as oversight, influence cost shifting behaviors. Results indicate that nonprofit hospitals facing higher normative pressures to demonstrate efficiency shift costs to a greater extent, and hospitals facing higher regulatory oversight shift costs to a lesser extent. Consistent with prior research, we also find that hospitals that obtain higher donations revenue shift costs to a greater extent. Our results show that, in addition to economic factors documented by prior literature, institutional factors also influence nonprofit hospitals’ cost shifting behaviors.

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