Understanding Nonprofit and Government Ownership: Evidence from Nursing Homes in the COVID-19 Pandemic

This paper explores the differences in incentives and thus behavior between for-profit and not-for-profit firms. I investigate a terrible choice nursing homes faced during the pandemic: isolate residents to prevent deaths from COVID-19 but doing so may increase total deaths by aggravating mental illnesses such as dementia. I explore how ownership structure led to differences in isolation measures taken and consequently health outcomes. I model decisions regarding isolation measures as a trade-off between profits and satisfying the demands of staff, with not-for-profit managers more constrained in how they consume profits. Using cell phone location data, I find that not-for-profit facilities implemented more restrictive isolation measures during the pandemic and thus had fewer COVID-19 cases and deaths. However, not-for-profit ownership is predictive of substantially more non-COVID deaths, such that they had more total deaths than for-profit facilities.