Nonprofit organizations may predominate when output quality is difficult to monitor. Hospital care has this characteristic. This study compared program cost and quality of care for Medicare patients hospitalized following onset of four common conditions by hospital ownership. Payments on behalf of Medicare patients admitted to for-profit hospitals during the first 6 months following a health shock were higher than for those admitted to other hospitals. With quality measured in terms of survival, changes in functional and cognitive status, and living arrangements, we found no differences in outcomes by hospital ownership. (C) 2001 Elsevier Science B.V.
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