Employment of physicians by hospitals – typically referred to as vertical integration – has increased significantly. Received theories fail to explain a key fact: The extent of vertical integration in not-for-profit (NFP) hospitals is substantially higher than in for-profit (FP) hospitals....

Prior empirical research on US hospitals mostly concludes that ownership type – not-for-profit (NFP) versus for-profit (FP) – does not affect financial performance. This is surprising, in light of strong predictions from theories of NFP firm behavior. We revisit the issue with a...