Does the Profit Motive Matter? COVID-19 Prevention and Management in Ontario Long-Term-Care Homes

Abstract

We introduce evidence that for-profit long-term-care providers are associated with less successful outcomes in coronavirus disease 2019 outbreak management. We introduce two sets of theoretical arguments that predict variation in service quality by provider type: those that deal with the institution of contracting (innovative competition vs. erosive competition) and those that address organizational features of for-profit, non-profit, and government actors (profit seeking, cross-subsidization, and future investment). We contextualize these arguments through a discussion of how contracting operates in Ontario long-term care. That discussion leads us to exclude the institutional arguments while retaining the arguments about organizational features as our three hypotheses. Using outbreak data as of February 2021, we find that government-run long-term-care homes surpassed for-profit and non-profit homes in outbreak management, consistent with an earlier finding from Stall et al. (2020) . Non-profit homes outperform for-profit homes but are outperformed by government-run homes. These results are consistent with the expectations derived from two theoretical arguments—profit seeking and cross-subsidization—and inconsistent with a third—capacity for future investment.