The Nonprofit policy has been a fundamental idea among Japanese medical facilities and for-profit organizations have been prohibited from entering into the hospital market. However recent deregulation movement brings a dispute concerning hospital management as a profitable business. In this paper, we estimated a change which might happen if the regulation were to be removed and considered whether the regulation is really effective or not, to understand an affect of deregulation. The followings are the results, which are attained through this study.
First, we found that the most important changes between before and after deregulation were the availability of profit distribution, that is, there is a nondistribution constraint. Means of financing was also an important factor but not essential. A crucial part was the constraint.
Second, we noticed that there was a confusion of an understanding of nonprofit policy. It should be distinguished ‘nonprofit as a legal status’ and ‘nonprofit as a motivation’. We need to remind that the deregulation can only change nonprofit as a legal status, not as a motivation.
Finally, we did a model analysis from a point of view that is whether the nondistribution constraint regulation can prevent from moral hazard in hospitals or not. As a result, we found that the constraint worked as a prevention of moral hazard under a lower quality premium. However, we could not justify the nondistribution constraint regulation which forces hospitals to follow the constraint.