Empirical evidence shows that non-profit hospitals are less likely to increase prices after a merger
with another hospital. True or false?
Non-profit hospitals
Non-profit hospitals refer to hospital institutions that are mainly funded by charity work, religious groups, or a group of researchers. They differ from profit hospitals because the non-profit hospitals do not pay for income and property taxes, whereas the profit hospitals have to pay for them. Non-profit hospitals have a limited channel for raising funds to carter for the expenses, unlike the profit hospitals, which have a variety of avenues to raise funds.
Answer to the Question
True. Once there is a merge between non-profit hospitals and another hospital, then the prices would increase. The merging of these hospitals means that there will be fewer operational hospitals contributing to a reduction in competition. Having a few functional hospitals implies that they can increase their prices and still get clients going to them because they are limited. The increase in rates by hospitals due to the merge is an indication of exploitation in the market. It is something that the government should intervene and come up with regulatory measures to ensure each citizen gets good quality healthcare.