Association for Public Policy Analysis & Management

Nonprofit and for-profit firms coexist in many industries, with the hospital sector being one of the most predominant examples. This paper explores whether nonprofit hospitals are more likely to make expensive investments with uncertain returns and potential public good value. Specifically, I estimate differences in the adoption of Electronic Medical Records (EMR) by ownership structure. I find that nonprofit hospitals are 59-70% more likely to have installed advanced EMR systems than for-profit hospitals by 2012. While I find little difference in the likelihood of meeting initial government requirements for the “meaningful use” of EMRs, I find that nonprofits are 12% more likely to reach more stringent meaningful use standards that began in 2014. That being said, the gap between nonprofit and for-profit adoption decreases as for-profit market penetration rates increase, suggesting some convergence when nonprofits face direct competition from for-profit hospitals.