We would like to invite you to participate in Management Engineering (ME) Seminar.
1. When: January 10th (Friday), 10:30 ~ 12:00
2. Where: SUPEX Building, #402
3. Speaker: Prof. Jihwan Moon (University of New South Wales)
4. Topic: Nonprofit vs. For-Profit Healthcare Competition :
How Service Mix Makes Nonprofit Hospitals More Profitable
5. Research field: Marketing
* Lecture will be delivered in Korean.
This paper studies the intersection between the largest U.S. industry – healthcare and $1 trillion nonprofit sector. Using analytical and empirical analyses, the authors reveal the marketing strategies helping private nonprofit hospitals achieve higher output, prices, and profits than for-profit hospitals. Nonprofit hospitals, focusing on both profits and output, obtain these outcomes by expanding their service mix with high-priced premium specialty medical services (PSMS) while, for basic services, for-profit hospitals can be more profitable with higher prices. Competition increases the differences between nonprofit and for-profit hospitals in PSMS breadth, output, and prices. Nonprofit hospitals lose their competitive advantage when competing with other like nonprofits; i.e., for-profit presence broadens available nonprofit PSMS. With broader service mixes, nonprofits focus more on national advertising than for-profits because PSMS (e.g., pediatric trauma, neurosurgery, heart transplants, oncology) require larger geographic markets than local basic services (e.g., laboratory, diagnostics, nursing, pharmaceutics). Exogenous, heterogeneous state regulations restricting for-profit hospital entry help econometric identification (i.e., markets prohibiting for-profits act as controls). Service mix may be a key difference between nonprofit and for-profit hospitals.