IS NON-PROFIT STATUS A SIGNAL OF BETTER QUALITY? MICRO-LEVEL EVIDENCE FROM JAPAN'S AT-HOME CARE INDUSTRY

Satoshi Shimizutani and Haruko Noguchi

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: After the introduction of public long-term care insurance in 2000, for-profit facilities were allowed to enter the at-home care market in Japan, where nonprofits are dominant. However, according to a popular hypothesis called the "contract failure," nonprofit centers are preferred over for-profit counterparts due to an asymmetry of information. If this is the case, a change in competition policy in the long-term care market would not work. This study takes advantage of unique data to examine directly whether a choice in type of management is biased toward nonprofits, as the contract failure hypothesis predicts. Our empirical findings are as follows. The share of users of for-profit providers occupies about 40 percent of the at-home care. In this sense, the entrance policy of proprietary firms after the introduction of public long-term care insurance has been welcomed. Regarding the preference between nonprofit and for-profits, households with higher care levels or any acquaintance who is a medical doctor or a professional caregiver are inclined to choose nonprofits, which are associated with the entrance restriction that only nonprofits are incumbent in medical care and institutional care. In addition, nonprofits enjoy their acquired benefits as earlier participants in the market. In this sense, proprietary providers are disadvantageous. On the contrary, households with more knowledge of suppliers tend to choose for-profits, which implies that this mitigating asymmetry of information might overcome the entrance limitations in other related markets, which makes the at-home market more competitive.

Pages: 20 pages
Date: 2003-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.esri.go.jp/jp/archive/e_dis/e_dis080/e_dis080a.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.esri.go.jp:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:080

Access Statistics for this paper

More papers in ESRI Discussion paper series from Economic and Social Research Institute (ESRI) Contact information at EDIRC.
Bibliographic data for series maintained by HORI nobuko ( this e-mail address is bad, please contact ).