There has long been concern whether care is better in for-profit (FP) or not-for-profit (NFP) nursing homes (NHs). In order to answer this question in the Israeli context, a cross-sectional study of quality was undertaken, as measured by the Ministry of Health (MoH) assessment teams. We examined a convenience sample of 127 NHs (48 NFP, 79 FP), comprising approximately three quarters of Israel's 193 such institutions at the time of the study (1998-2001). A 100-point composite scale was designed derived from the detailed assessments of seven different professions. The quality of care on average was better in NFP (67/100 points) compared to FP (55/100 points) institutions (p<0.01). This differential was maintained even after adjusting for potential confounders such as the daily rate paid, institutional size and staffing levels. While homes belonging to both sectors were to be found among those receiving good to excellent grades, only FPs received lower quality scores. We conclude that in Israel, as in many other jurisdictions studied, FP NHs provide poorer care than NFPs, possibly due to a conflict between the demands of patient care and the desire to maximize profits in the FP institutions.