Federally incorporated not-for-profit clinical trial organization

A simple 1 page paper-based case report form CRF will be used and there will be reimbursement to physicians for participation. Please let us know if you are interested in participating in this program emailto: clinicaltrials chrc.

We will then follow with sending you the study overview, CRF, copy of the central ethics approval for your records and will arrange to have a supply of 7 days holters delivered to your office.

Changing the structure or nature of the corporation Making major modifications to your corporation or its activities. Services, fees and processing times A full list of our services, how much they cost and how long the process takes. Resources Tools and information. Consult a lawyer or another professional advisor to ensure that the specific needs of your corporation are met.

To create a not-for-profit corporation, you need to incorporate. The quickest and easiest way to do this is to incorporate online, but you can also incorporate by email or mail. Incorporation of a professional association that is, a corporation whose proposed name or purposes suggest that it considers itself to be an association of professionals does not provide that corporation with the authority to practice, or to regulate the practice of, the profession.

It is the corporation's responsibility to comply with provincial laws respecting professions. Once the corporation has been created, a number of other items must be considered. Next steps following incorporation provides information on what needs to be done after a corporation has been created and on how to operate a not-for-profit corporation under the NFP Act. What is the rationale for not-for-profit production, then, if the for-profit market generally achieves a high level of social welfare and the government provides compensation when the market fails?

A not-for-profit organization gives up "the right to accumulate a monetary residual which then can be distributed to its owners for personal consumption. Instead, all not-for-profit organizations' resources must be used internally In this respect they differ from for-profit firms.

On the other hand, not-for-profit organizations do not have the government's right to raise funds through compulsory taxation, but must depend on some combination of 1 selling their product or products at price levels sufficient to cover their costs and 2 obtaining revenues from voluntary donations of money, goods, and services. Many not-for-profit organizations do both. Provided that an organization agrees to the nondistribution constraint and, in most states, has "reasonable" operating costs , state and federal laws accord it special status.

It is generally exempt from taxes 3 and also receives favored status under most federal legislation. The principles on which this special treatment is founded are not clearly formulated Hansmann, ; however, since not-for-profit organizations existed before these government-conferred advantages, this favored status would not appear to be causative.

A number of theories attempt to explain the existence of not-for-profit organizations. One is that the not-for-profit organization is optimal when information regarding the quality or quantity of service is asymmetric in favor of the seller Hansmann, ; Easley and O'Hara, ; Bays When consumers are at an informational disadvantage, the market may not provide sufficient discipline to prevent a for-profit producer from marketing inferior services at excessive prices—a welfare loss for consumers and, by extension, for society.

In such a case consumers are better served by a not-for-profit producer. Although it, too, could cut quality or raise prices, according to this theory its managers have little incentive to do so, because they are prohibited from sharing in any excess profits. Often the complexity of these services, their nonstandard character, and the circumstances under which they are provided make it difficult for the consumer to determine whether the services are performed adequately.

Thus, the patron has an incentive to seek some constraints on the organizations' behavior beyond those he is able to impose by direct, private contract. Hansmann, According to this theory, then, not-for-profit firms would be dominant in markets in which the quality of the product is difficult to monitor, because the preferences of consumers for the ostensible protection of the not-for-profit form would make it difficult or impossible for for-profit producers to remain in the market.

However, we observe the continued existence of both forms in the nursing home and clay-care industries, where presumably information asymmetry exists and where transferring to a different provider is difficult James and Rose-Ackerman, Forthcoming. Other goods and services for which quality is difficult to ascertain are produced almost entirely by for-profit firms; examples are legal and medical services, personal computers, and used cars Ben-Ner, ; James and Rose-Ackerman, Forthcoming.

On empirical grounds, then, it appears that information asymmetry alone does not explain the presence of not-for-profit organizations. An alternative theory is proposed by Ben-Ner , who theorizes that the not-for-profit organization emerges in response to consumers' desire for control. According to his model, consumers may choose to establish their own organization in preference to taking their chances in the marketplace. A group of parents might start its own day-care center, for example.

The not-for-profit firm e. The nondistribution constraint reduces the tendency by managers of such organizations to misrepresent or produce lower quality. Ben-Ner does not discuss another alternative available to consumers, which is to form coalitions to reduce or remove information asymmetry by sharing information, seeking expert advice, or conducting research.

Weisbrod , characterizes not-for-profit organizations as responses to failures by government rather than failures by the private market. According to this theory, government responds to society's average demand for public services, conveyed through its collective-choice mechanisms.

This average, however, underrepresents those members of society who have a very high demand for governmental services, as well as those whose tastes differ from the average.

A private school, for example, can be a means for citizens to meet their demand for higher quality or to meet their special religious, linguistic, or other preferences. Thus, this model suggests that not-for-profit organizations arise to meet the heterogeneous demands of consumers for public and quasi-public services that are not fully met by the government's standardized output.

A somewhat different model proposes that the government delegate the production of certain public or quasi-public goods to not-for-profits rather than producing them itself James and Rose-Ackerman, Forthcoming. According to this model, private production may offer the advantage of lower costs, because private firms can charge fees to cover some of their costs e.

Not-for-profit organizations also offer the potential for receiving donations of money and in-kind services that is not offered by for-profit firms. The subsidy or grant to a not-for-profit organization is often used by government when it desires to purchase intangible services for which it is difficult to measure the quid pro quo.

Too, policymakers may wish to provide more differentiated services, but may be bureaucratically unable to do so except by subsidizing private organizations. Thus, economic theory offers several explanations for why some goods and services are produced by not-for-profit firms. The theory suggests that not-for-profit production may exist as a response to consumers' need for protection when the good or service cannot be observed or its quality accurately evaluated, as a response to differential demand for public or quasi-public goods when government has difficulty providing other than standardized output, as a means for government's achieving lower-cost production of certain public goods, or for a combination of these reasons.

The rationale for the existence of not-for-profit firms, however, does not answer other important questions such as, what decision rules characterize the use of economic resources by these firms? In particular, how do their decisions about what to produce, and in what quantities, differ from the decisions of for-profit firms? Theories addressing these questions are reviewed in the following section. Traditional economic theory treats the management structure and decision-making process as a black box.

The firm is characterized by an objective function that represents either a single decision maker or the result of interactions and the resolution of any conflicts among stockholders, trustees, and managers. The basic model hypothesizes that, irrespective of how decisions are made, the firm's objective is to maximize profits. More recent theories of the for-profit firm, discussed below, take greater cognizance of the role of managers and the possibility that profit maximization may not be their sole or even their primary objective.

Economic theories of the behavior of not-for-profit firms generally ascribe to them objectives other than profit i. In the simplest not-for-profit model the objective is to maximize output.

If the not-for-profit organization produces a single product, such as day care, receives all its revenues from the sale of that product, and has the same cost structure as a for-profit producer, in the short run the not-for-profit firm will produce more of the product than the profit-maximizing firm, but at a higher cost.

However, if there are no barriers to prevent new firms either not-for-profit or for-profit from entering the industry, over the long run their entry will cause the industry, to become as efficient as if it were entirely populated by profit-maximizing producers.

This picture becomes more complicated, however, in the more relevant case in which a not-for-profit firm receives unrestricted donations and produces more than one product. Whether the not-for-profit firm's long-run output is greater or lesser than that of the for-profit firm under these conditions—which are characteristic of not-for-profit hospitals and private educational institutions—will depend on the objectives of managers.

If not-for-profit managers and their donors desire to produce higher levels of some or all of their outputs serving greater numbers of people, for example , these levels will be obtained at the expense of efficiency in comparison with the profit-maximizing firm in a competitive industry. As discussed below, however, the hospital industry has substantial entry barriers and other characteristics that cause it to differ from the purely competitive model.

The fact that a not-for-profit firm's managers do not share in any surplus resulting from efficiency and the fact that they usually have access to donated revenues not tied to specific production are offered as positive reasons for the existence of not-for-profit organizations. These characteristics also may have potential negative effects. For instance, whereas stockholders can exercise control of managers of for-profit firms, or, in extreme cases, takeovers via the capital market can perform the role of selecting managers who maximize profits through efficient production, such mechanisms are not available in the not-for-profit arena.

The attenuation of "property rights" managers' rights to any residual earnings or capital gains in the case of not-for-profits can encourage "shirking," choice of inefficient inputs, and production of a nonoptimal mix of outputs James and Rose-Ackerman, Forthcoming; Sloan, Forthcoming.

Managers of not-for-profit organizations may accord themselves high salaries, "perks" such as plush offices, or lavish expense accounts; they also may choose an inefficient production technology, e. Lee's model of the not-for-profit hospital, for example, suggests that it will acquire sophisticated equipment and highly trained personnel beyond the point required for production in order to enhance the prestige of the organization and, by extension, its managers.

The ability of a not-for-profit hospital to continue to operate in this manner should be limited by the extent to which for-profit firms can enter the market and drive down the price through competition, but the availability of donations can cushion the not-for-profit manager from the pressures of competition.

Models of not-for-profit organizations often include the objective of maximizing quality Newhouse, ; however, the effect of this objective on consumer welfare is ambiguous.

If not-for-profits produce higher quality and charge higher fees prices to cover the added costs, then consumers can infer quality from the fees, and those consumers who desire higher quality and are willing to pay the additional cost can choose to do so.

If, however, the higher quality is paid for out of donations, fees may be the same for both high-quality and low-quality providers.

In this case other sorting methods will be utilized, such as waiting lists in the case of high-quality not-for-profit nursing homes or day-care centers. In the case of not-for-profit organizations that have multiple outputs e.

The profit-maximizing firm theoretically will not do so, because its optimal strategy is to produce each product line to the point where marginal costs and marginal revenues are equal. The manager of a not-for-profit organization, however, may pursue the goal of producing outputs that he values e. The surplus then can be used to subsidize the valued outputs. The sale of gifts and T-shirts to subsidize the exhibits and research activities of the Metropolitan Museum and the Smithsonian Institution is one example.

The provision of well-reimbursed ancillary services to subsidize a coronary care unit is another. As with preferred inputs, however, the ability of not-for-profit managers to engage in cross-subsidization over time is limited to the extent that new firms may enter and compete away the profits on the products that are providing the subsidies. Thus, not-for-profits' continued discretion over the production of desired outputs over time requires barriers to entry, donations, or both.

This discretionary behavior by managers does not necessarily coincide with the preferences of donors or with maximum social welfare. The presence of entry barriers and asymmetric information suggests that profit-maximizing firms may not operate efficiently in industries such as hospital care and education. However, there also is a question of whether pure profit maximization is the sole objective of private firms in this or indeed any industry. Alternative models have been suggested that give greater weight than does the traditional model to the preferences of managers.

Baumol , for example, develops a model that characterizes the firm as maximizing total revenues, subject to the constraint that stockholders receive a sufficient return to make the firm's securities attractive in the capital market.

Such a firm will behave, according to the theory, very similarly to a not-for-profit firm. Also similarly, this type of behavior can be sustained only if there are entry barriers. Another model, from Williamson , suggests that managers of for-profit firms prefer certain expenditures to others because they contribute to the managers' status and security. This model is analogous to the input-preference model of not-for-profit behavior discussed previously. However, as distinct from Baumol's model, Williamson's model gives a greater weight to profits, because they permit the firm to expand, which also provides prestige to the manager.

Both models predict that the firm will favor certain factors of production and will produce some outputs beyond profit-maximizing levels, behaviors that also are attributed to the not-for-profit firm and that imply nonefficient production. This review of the theoretical literature comparing the behavior of not-for-profit with for-profit enterprises suggests that for-profit organization results in greater efficiency i.

These circumstances do not appear to typify the hospital industry. Hospital managers may well have preferences and objectives that differ from profit maximization, including the enhancement of their organization's prestige; the provision of specific services that further this or other goals; the provision of charitable care, teaching, or research; and the improvement of their own professional status.

Also, this is an industry in which there are substantial entry barriers. The capital requirements to start a hospital are large. Too, certificate-of-need regulations greatly constrain the ability of firms to enter the hospital industry. Hospital services are extremely complex, and most consumers have little or no direct experience for evaluating them, nor do they always have the opportunity to obtain information from others before seeking these services.

Thus, information asymmetry with its potential market failure is likely to be present for many hospital services. However, the issue of information asymmetry depends crucially on the role of the physician. If, as Hansmann suggests, the physician acts as the patient's knowledgeable agent with respect to assessing the quality of hospital services, the hospital is faced with a powerful constraint on its ability either to cheat on quality or to produce services on which consumers and their physicians place little value.

If, on the other hand, physicians dominate hospital decision making and direct it toward maximizing their own incomes, as Pauly and Redisch and others have suggested, the quantity and mix of services produced would be that which satisfies the preferences of physicians rather than the preferences of consumers or managers.

The nature of hospital services and the characteristics of the hospital industry, pose the question of whether for-profit production will achieve the optimal levels of efficiency and consumer satisfaction that the competitive market model predicts. Thus, while the nonprofit organization appears to compare unfavorably with the competitive ideal, this standard of comparison probably is inappropriate in the hospital industry.

For-profit hospitals, because of entry barriers, information asymmetry, and the ambiguity of the physician's role as the consumer's agent, may not be presumed to produce the quantity and quality of services desired by society at an efficient price.

At the same time, economic theory, suggests that there also may be reasons why not-for-profit hospitals do not behave in socially optimal ways. Even though managers of not-for-profits cannot receive directly a share of any monetary surplus, the presence of donations and entry barriers and the absence of stockholder pressures may allow them considerable leeway to use resources and to produce services according to their own preferences.

These preferences may or may not be consistent with those of society. This discussion has not addressed the crucial issue of how services are to be distributed. According to standard economic theory, the profit-maximizing firm in a competitive economy sells its product at the market price to anyone who wants to buy at that price and who can afford it.

Thus, the competitive market distributes goods and services in accord with the existing income distribution. If society prefers that hospital services be distributed more equitably, and if managers of not-for-profit hospitals share society's preferences, then these hospitals may be superior to for-profit hospitals when judged in terms of societal well-being. The terms "for-profit," "investor-owned," and "proprietary" are all used in this report to refer to organizations that are owned by individuals and corporations such as institutional investors to whom profits are distributed.

Such organizations stand in contrast to organizations that are incorporated under state laws as nonprofit or not-for-profit organizations.

The defining characteristics of both types of organizations are discussed later in this chapter. Terms within each set are not used in a consistent fashion in the literature. Nevertheless, the committee sees some differences in connotation among the terms and has attempted to use terminology appropriately and consistently as follows.

The term "proprietary" is used to connote the traditional independent owner-operated institution for example, hospital, nursing home, or home health agency. The term "investor-owned" is used to connote companies rather than institutions that have a substantial number of stockholders. The term "for-profit" encompasses both.

A drawback of the term "for-profit'' is that it seems to define organizations in terms of assumed behavior—that is, that such organizations will seek to maximize profit, because by definition that is their purpose.

However, the committee sees organizational behavior not as a matter for definition but as a topic to be investigated empirically. On the other side, the committee prefers the term "not-for-profit" over the term "nonprofit," both because the term "not-for-profit" conveys a direct contrast with the term "for-profit" and because the term "nonprofit" often is incorrectly interpreted to mean that the organization has or should have no surplus of revenues over expenses.

That is again an empirical question, not a matter of definition. Both for-profit and not-for-profit types of ownership stand in contrast to "public" or "government" ownership. Most health care institutions in the United States are private, not public, and the debate about for-profit versus not-for-profit ownership of health care institutions should not be misconstrued as a debate about public versus private ownership.

Except where explicitly noted, the public or government-owned institutions referred to in this report are owned by state or local governments, not the federal government.

For example, the merging health care supply companies, Baxter Travenol and American Hospital Supply Corporation, both have home care subsidiaries; several insurance companies e.

Grace and Co. The term "efficiency" appears in the report because for-profit organizations are commonly alleged to be more efficient than public or not-for-profit organizations. However it should be recognized that because "efficiency" refers to the comparative cost at which a given good or service is produced, it can be properly studied only when there is a high degree of standardization of the good or service being produced.

This condition seldom holds in studies of health care costs. Data tend to be available only on such measures as expenses per day or per case. Whether differences in such measures indicate differences in efficiency or are due to differences in the service being produced is, unfortunately, generally conjectural.