Church ownership and hospital efficiency.

Abstract

Using a sample of California hospitals, the effect of church ownership was examined as it relates to nonprofit hospital efficiency. Efficiency scores were computed using a nonparametric method called data envelopment analysis (DEA). Controlling for hospital size, location, system membership, and type of church ownership, church-owned hospitals were found to be more frequently in the efficient category than their secular nonprofit counterparts. The outcomes have policy implications for reducing healthcare expenditures by focusing on increasing outputs or decreasing inputs, as appropriate, and bolstering the case for church-sponsored hospitals to retain the tax-exempt status due to their ability to manage their resources as efficiently as (or more efficiently than) secular hospitals.