Do Non-profit Enterprises Pay More For Their Labor Inputs? An Examination of Hospital Behavior

Abstract

How the behavior of non-profit organizations differs from that of for-profit organizations has been the topic of a wide body of research. The motivational and behavioral differences resulting from the two organizational forms are particularly important in the U.S. health-care sector – an industry dominated by non-profit enterprise. This paper outlines some of the theories of non-profit hospital behavior and reviews some of the empirical work related to those theories. I then examine empirically whether there is a difference in wages and salaries paid to seven categories of hospital employee in different types of hospitals. To my knowledge, there have been no studies that evaluate directly whether non-profit hospitals pay more than their for-profit counterparts. I find that non-profit hospitals pay significantly higher wages to their employees in five of seven major categories. In the conclusion I highlight those theories that are consistent with these empirical findings and those that are not.