Studies of mixed industries have generally assumed,
explicitly or implicitly, that church-related nonprofit, secular
nonprofit, and governmental organizational forms are interchangeable
in their objectives and outputs. This paper examines data on the
compensation of executives in the hospital industry in order to
assess the extent to which these three organizational forms are
indeed substitutes. Compensation levels, the relative use of fixed
salaries versus bonus compensation, the criteria that organizations
report using to determine bonuses, and fringe benefits are all
analyzed. We conclude that the incentive contracts offered to
executives at church-related nonprofit, secular nonprofit, and
governmental hospitals imply that substantive differences exist
among the objectives and, hence, the outputs of different organizational
forms.
Jeffrey P. Ballou, Department
of Economics, Northwestern University
Burton A. Weisbrod, Department of Economics,
Northwestern University
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