“Can Nonprofits Save Lives During Financial Stress?
Evidence from the Hospital Industry
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by Merih Sevilir
IWH Halle
Place: MA-330
Abstract
The number of for-profit hospitals has grown tremendously in the U.S. We show that the vulnerability of for-profit hospitals to negative external financing shocks generates adverse outcomes for patients. Using confidential patient-discharge data matched with hospital financial data, we show that negative shocks in external capital markets in[1]crease patient mortality at for-profit hospitals but not at nonprofit hospitals. This effect is robust to refined controls for hospital characteristics, patient demographics, diagnoses, and treatment procedures. The effect is concentrated among patients hold[1]ing public insurance and facing greater health risks. Our evidence points to nonprofit hospitals’ deeper cash reserves serving as a cushion against negative financing shocks, allowing them to maintain the delivery of quality healthcare..
Bio
Merih Sevilir is head of the Department of Laws, Regulations and Factor Markets at Halle Institute for Economic Research and Professor of Finance at European School of Management and Technology (ESMT) in Berlin. She researches entrepreneurial finance, venture capital, private equity and healthcare finance. She served as Associate Editor at RFS. She has been serving as Associate Editor at Journal of Corporate Finance. She has published in Journal of Finance, Journal of Financial Economics and Review of Financial Studies, among other highly ranked finance journals.
