The Effects of Therapist Contracting on For-Profit and Not-for-Profit Medical Billing Behavior

Within the United States, a growing debate about special tax treatment and community benefits provided by not-for-profits (NFPs) has been occurring. While the nondistribution constraint of NFPs is often thought to incentivize higher quality and more charitable care, NFPs may also be used by contractors for personal gain. This study explores whether the use of external contractors by NFP health care providers alter behavior. Using a sample of patients receiving rehabilitative care for hip fractures in skilled nursing facilities, and exploiting variation in ownership and contracting status, this study finds contracting in NFPs results in increased prevalence of profit-maximizing behaviors more commonly associated with FPs. Furthermore, contracting results in more revenue focused care delivery patterns.