Decision-makers often need to think about the appropriateness of the laws and regulations regarding the community benefit services of non-profit hospitals. Taiwan’s Medical Care Act was amended in 2004 to lower the minimum standards for non-profit hospitals in providing community benefit services, and the standard for the amount of community benefit services was modified into two independent criteria of medical community services activities and educational research activities. This study aimed to investigate the impact of the law amendment on the non-profit hospitals in setting aside funds for uncompensated care services expenditure, educational research expenditure and community benefit services expenditure. With the 2001-2008 data on 41 non-profit hospitals, this study used the panel data fixed effect model for analysis. The empirical results show that the amendment of the Medical Care Act in modifying the funds set aside for community benefit services has no significant impact on community benefit services expenditure on average. The amendment of the Medical Care Act in 2004 to modify the standards for setting aside the funds for community benefit services has not significantly reduced the non-profit hospitals’ expenditure on community benefit services. However, non-profit hospitals with high community benefit services expenditure significantly reduced the uncompensated care services expenditure, educational research expenditure and community benefit services expenditure following the law amendment. The empirical results of this study show that the agency theory can better explain Taiwan’s non-profit hospitals engaging in medical community services activities and other community benefit services.
2014 Singapore Health Economics Association Annual Conference, Singapore Health Economics Association