Seminar: Healthcare Markets: For-profit vs. Nonprofit Hospital Competition
Professor Steven Shugan is visiting UNSW Business School in May as part of our Distinguished Scholar scheme. All are welcome to attend the seminar and lunch, details below.
Date: Tuesday, 15th May
Time: 11 – 12.30pm
Venue: Central Lecture Block 1
Join us for a catered lunch after the seminar at AGSM Courtyard, Ground Floor AGSM Building (RSVP to firstname.lastname@example.org for catering purposes).
We find unusual competitive interactions between for-profit and nonprofit hospitals contribute to nonprofit hospitals having higher profits and prices than for-profit. The nonprofits’ legal inability to distribute profits to stakeholders allows nonprofits to sacrifice profits for market share, thus creating formidable competitive advantages. Specifically, given the nonprofits’ willingness to forego profits for output, nonprofits deter for-profit entry into premium specialty medical services (PSMS) markets, or for-profits cede market share to nonprofits foreseeing low post-entry competitive prices in costly PSMS markets. Consequently, nonprofits dominate PSMS (e.g. epilepsy, cardiology, orthopedics, and neurosurgery services) markets, commanding both greater output and higher prices. Those gaps increase as competition intensifies because nonprofits seeking output invest more aggressively. Predictably, the most profitable U.S. hospitals are nonprofit. Last, focusing on PSMS, nonprofits employ national advertising while for-profits use local advertising for basic services. Our research involves both game-theoretic analyses and empirical tests with several healthcare databases.
Steven M. Shugan, McKethan-Matherly Eminent Scholar & Professor at the University of Florida, Warrington College of Business, teaches multivariate statistics, marketing models and advanced marketing management. His current research includes services marketing (integrating operations), metrics, entertainment marketing, advance-selling, normative methods for modeling competition, markets for evaluative information, models of selling and product policy.