Nonprofit to for-profit conversions by hospitals, health insurers, and health plans.
Conversion of hospitals, health insurers, and health plans from nonprofit to for-profit ownership has become a focus of national debate. The author examines why nonprofit ownership has been dominant in the US health system and assesses the strength of the argument that nonprofits provide community benefits that would be threatened by for-profit conversion. The author concludes that many of the specific community benefits offered by nonprofits, such as care for the poor, could be maintained or replaced by adequate funding of public programs and that quality and fairness in treatment can be better assured through clear standards of care and adequate monitoring systems. As health care becomes increasingly commercialized, the most difficult parts of nonprofits' historic mission to preserve are the community orientation, leadership role, and innovation that nonprofit hospitals and health plans have provided out of their commitment to a community beyond those to whom they sell services. (+info)
Analysis of the rationale for, and consequences of, nonprofit and for-profit ownership conversions.
OBJECTIVES: To examine percursors to private hospitals conversion, both from nonprofit status to for-profit status and from for-profit to nonprofit status, as well as the effect of hospital conversions on hospital profitability, efficiency, staffing, and the probability of closure. DATA SOURCES: The Health Care Financing Administration's Medicare Cost Reports and the American Hospital Association's Annual Survey of Hospitals. STUDY DESIGN: Bivariate and multivariate analyses comparing conversion hospitals to nonconversion hospitals over time were conducted. DATA EXTRACTION METHODS: The study sample consisted of all private acute care hospital conversions that occurred from 1989 through 1992. PRINCIPAL FINDINGS: Hospitals that converted had significantly lower profit margins prior to converting than did nonconversion hospitals. This was particularly true for nonprofit to for-profit conversions. After converting, both nonprofit and for-profit hospitals significantly improved their profitability. Nonprofit to for-profit hospital conversions were associated with a decrease in the ratio of staff to patients. No association was found between for-profit to nonprofit conversion and staff-to-patient ratios. The difference seems partially attributed to the fact that nonprofit hospitals that converted had higher staff ratios than the industry average. For-profit to nonprofit hospital conversions were associated with an increase in the ratio of registered nurses to patients and administrators to patients, despite the fact that nonprofit and for-profit hospitals did not differ in these ratios. CONCLUSIONS: The improvement in financial performance following hospital conversions may be a benefit to the community that policymakers want to consider when regulating hospital conversions. (+info)
Evaluating the sale of a nonprofit health system to a for-profit hospital management company: the Legacy Experience.
OBJECTIVE: To introduce and develop a decision model that can be used by the leadership of nonprofit healthcare organizations to assist them in evaluating whether selling to a for-profit organization is in their community's best interest. STUDY SETTING/DATA SOURCES: A case study of the planning process and decision model that Legacy Health System used to evaluate whether to sell to a for-profit hospital management company and use the proceeds of the sale to establish a community health foundation. Data sources included financial statements of benchmark organizations, internal company records, and numerous existing studies. STUDY DESIGN: The development of the multivariate model was based on insight gathered through a review of the current literature regarding the conversion of nonprofit healthcare organizations. DATA COLLECTION/EXTRACTION METHODS: The effect that conversion from nonprofit to for-profit status would have on each variable was estimated based on assumptions drawn from the current literature and on an analysis of Legacy and for-profit hospital company data. PRINCIPAL FINDINGS: The results of the decision model calculations indicate that the sale of Legacy to a for-profit firm and the subsequent creation of a community foundation would have a negative effect on the local community. CONCLUSIONS: The use of the decision model enabled senior management and trustees to systematically address the conversion question and to conclude that continuing to operate as a nonprofit organization would provide the most benefit to the local community. The model will prove useful to organizations that decide to sell to a for-profit organization as well as those that choose to continue nonprofit operations. For those that decide to sell, the model will assist in minimizing any potential negative effect that conversion may have on the community. The model will help those who choose not to sell to develop a better understanding of the organization's value to the community. (+info)
Uncompensated care and hospital conversions in Florida.
Hospital conversions to for-profit ownership have prompted concern about continuing access to care for the poor or uninsured. This DataWatch presents an analysis of the rate of uncompensated care provided by Florida hospitals before and after converting to for-profit ownership. Uncompensated care declined greatly in the converting public hospitals, which had a significant commitment to uncompensated care before conversion. Among converting nonprofit hospitals, uncompensated care levels were low before conversion and did not change following conversion. The study suggests that policymakers should assess the risk entailed in a conversion by considering the hospital's historic mission and its current role in the community. (+info)
The association between for-profit hospital ownership and increased Medicare spending.
BACKGROUND AND METHODS: The rate of conversion to for-profit ownership of hospitals has recently increased in the United States, with uncertain implications for health care costs. We compared total per capita Medicare spending in areas served by for-profit and not-for-profit hospitals. We used American Hospital Association data to categorize U.S. hospital service areas as for-profit (meaning that all beds in the area were in for-profit hospitals), not-for-profit (all beds were in not-for-profit hospitals), or mixed in 1989, 1992, and 1995. We then used data from the Continuous Medicare History Sample to calculate the 1989, 1992, and 1995 spending rates in each area, adjusting for other characteristics known to influence spending: age, sex, race, region of the United States, percentage of population living in urban areas, Medicare mortality rate, number of hospitals, number of physicians per capita, percentage of beds in hospitals affiliated with medical schools, percentage of beds in hospitals belonging to hospital chains, and percentage of Medicare beneficiaries enrolled in health maintenance organizations. RESULTS: Adjusted total per capita Medicare spending in the 208 areas where all hospitals remained under for-profit ownership during the study years was greater than in the 2860 areas where all hospitals remained under not-for-profit ownership ($4,006 vs. $3,554 in 1989, $4,243 vs. $3,841 in 1992, and $5,172 vs. $4,440 in 1995; P<0.001 for each comparison). Mixed areas had intermediate spending rates. Spending in for-profit areas was greater than in not-for-profit areas in each category of service examined: hospital services, physicians' services, home health care, and services at other facilities. The greatest increases in per capita spending between 1989 and 1995 were for hospital services (a mean increase of $395 in for-profit areas and $283 in not-for-profit areas, P=0.03 for the comparison between for-profit and not-for-profit areas) and home health care (an increase of $457 in for-profit areas and $324 in not-for-profit areas, P<0.001). Between 1989 and 1995, spending in the 33 areas where all hospitals converted from not-for-profit to for-profit ownership grew more rapidly than in the 2860 areas where all hospitals remained under not-for-profit ownership ($1,295 vs. $866, P=0.03). CONCLUSIONS: Both the rates of per capita Medicare spending and the increases in spending rates were greater in areas served by for-profit hospitals than in areas served by not-for-profit hospitals. (+info)
Patient satisfaction in Bangkok: the impact of hospital ownership and patient payment status.
INTRODUCTION: Patient satisfaction with care received is an important dimension of evaluation that is examined only rarely in developing countries. Evidence about how satisfaction differs according to type of provider or patient payment status is extremely limited. OBJECTIVE: To (i) compare patient perceptions of quality of inpatient and outpatient care in hospitals of different ownership and (ii) explore how patient payment status affected patient perception of quality. METHODS: Inpatient and outpatient satisfaction surveys were implemented in nine purposively selected hospitals: three public, three private for-profit and three private non-profit. RESULTS: Clear and significant differences emerged in patient satisfaction between groups of hospitals with different ownership. Non-profit hospitals were most highly rated for both inpatient and outpatient care. For inpatient care public hospitals had higher levels of satisfaction amongst clientele than private for-profit hospitals. For example 76% of inpatients at public hospitals said they would recommend the facility to others compared with 59% of inpatients at private for-profit hospitals. This pattern was reversed for outpatient care, where public hospitals received lower ratings than private for-profit ones. Patients under the Social Security Scheme, who are paid for on a capitation basis, consistently gave lower ratings to certain aspects of outpatient care than other patients. For inpatient care, patterns by payment status were inconsistent and insignificant. CONCLUSIONS: The survey confirms, to some extent, the stereotypes about quality of care in hospitals of different ownership. The results on payment status are intriguing but warrant further research. (+info)
Capital finance and ownership conversions in health care.
This paper analyzes the for-profit transformation of health care, with emphasis on Internet start-ups, physician practice management firms, insurance plans, and hospitals at various stages in the industry life cycle. Venture capital, conglomerate diversification, publicly traded equity, convertible bonds, retained earnings, and taxable corporate debt come with forms of financial accountability that are distinct from those inherent in the capital sources available to nonprofit organizations. The pattern of for-profit conversions varies across health sectors, parallel with the relative advantages and disadvantages of for-profit and nonprofit capital sources in those sectors. (+info)
Hospital ownership and preventable adverse events.
OBJECTIVE: To determine if type of hospital ownership is associated with preventable adverse events. DESIGN: Medical record review of a random sample of 15,000 nonpsychiatric, non-Veterans Administration hospital discharges in Utah and Colorado in 1992. MEASUREMENTS AND MAIN RESULTS: A two-stage record review process using nurse and physician reviewers was used to detect adverse events. Preventability was then judged by 2 study investigators who were blinded to hospital characteristics. The association among preventable adverse events and hospital ownership was evaluated using logistic regression with nonprofit hospitals as the reference group while controlling for other patient and hospital characteristics. We analyzed 4 hospital ownership categories: nonprofit, for-profit, major teaching government (e.g., county or state ownership), and minor or nonteaching government. RESULTS: When compared with patients in nonprofit hospitals, multivariate analyses adjusting for other patient and hospital characteristics found that patients in minor or nonteaching government hospitals were more likely to suffer a preventable adverse event of any type (odds ratio [OR] 2.46; 95% confidence interval [CI], 1.45 to 4.20); preventable operative adverse events (OR, 4.85; 95% CI, 2.44 to 9.62); and preventable adverse events due to delayed diagnoses and therapies (OR, 4.27; 95% CI, 1.48 to 12.31). Patients in for-profit hospitals were also more likely to suffer preventable adverse events of any type (OR, 1.57; 95% CI, 1.03 to 2.38); preventable operative adverse events (OR, 2.63; 95% CI, 1.42 to 4.87); and preventable adverse events due to delayed diagnoses and therapies (OR, 4.15; 95% CI, 1. 84 to 9.34). Patients in major teaching government hospitals were less likely to suffer preventable adverse drug events (OR, 0.38; 95% CI, 0.16 to 0.89). CONCLUSIONS: Patients in for-profit and minor teaching or nonteaching government-owned hospitals were more likely to suffer several types of preventable adverse events. Further research is needed to determine how these events could be prevented. (+info)