Sociological and Economic Theories of Markets and Nonprofits: Evidence from Home Health Organizations

In this article, data on home health agencies reveal surprisingly few differences between organizations of different tax status (nonprofit vs. forprofit). These findings direclty contradict economic theories of nonprofit organization, as well as third-party government theory from political science. Since ecological theory in sociology proposes a useful explanation for organizational similartities, the authors search for differences between nonprofit and forprofit organizations among generalists and specialists. They find that specialists are quite similar, regardless of tax status, but generalists are different, a disparity that seems to contradict ecological analysis. Since institutional theory also explains isomorphism, the authors search for differences between organizations that do and do not belong to chains. Chains are more similar than nonchains. The discussion of the results centers on changes in the institutional context of home health care over the last decade, especially cascade effects of prospective payment schemes and the advent of new organizational forms. The authors conclude that the idea of accommodative isomorphism helps account for similarities among nonprofit and forprofit chains.