Camelot or common sense? The logic behind the UCSF/Stanford merger.
Many academic medical centers (AMCs) throughout the United States have established their own community-based integrated delivery systems by purchasing physician groups and hospitals. Other AMCs have merged with existing nonprofit community-based delivery systems. Still other AMCs have been sold to for-profit firms. The AMCs at Stanford and the University of California, San Francisco (UCSF), chose a different strategy: to merge with each other to respond to the unique characteristics of the Bay Area marketplace. (+info)
The corporate practice of health care ... a panel discussion.
The pros and cons of treating health care as a profit-making business got a lively airing in Boston May 16, when the Harvard School of Public Health's "Second Conference on Strategic Alliances in the Evolving Health Care Market" presented what was billed as a "Socratic panel." The moderator was Charles R. Nesson, J.D., a Harvard Law School professor of 30 years' standing whose knack for guiding lively discussions is well known to viewers of such Public Broadcasting Service series as "The Constitution: That Delicate Balance. "As one panelist mentioned, Boston was an interesting place for this conversation. With a large and eminent medical establishment consisting mostly of traditionally not-for-profit institutions, the metropolis of the only state carried in 1972 by liberal Presidential candidate George McGovern is in one sense a skeptical holdout against the wave of aggressive investment capitalism that has been sweeping the health care industry since the 1994 failure of the Clinton health plan. In another sense, though, managed care-heavy Boston is an innovative crucible of change, just like its dominant HMO, the not-for-profit but merger-minded Harvard Pilgrim Health Care. Both of these facets of Beantown's health care psychology could be discerned in the comments heard during the panel discussion. With the permission of the Harvard School of Public Health--and asking due indulgence for the limitations of tape-recording technology in a room often buzzing with amateur comment--MANAGED CARE is pleased to present selections from the discussion in the hope that they will shed light on the business of health care. (+info)
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)
Market power and hospital pricing: are nonprofits different?
Dramatic changes in hospitals' operating environments are leading to major restructuring of hospital organizations. Hospital mergers and acquisitions are increasing each year, and conversions by hospitals to different forms of ownership also are continuing apace. Such changes require policymakers and regulators to develop and implement policies to ensure that consumers' interests are protected. An important consideration in this process is the impact on the price of hospital care following such transactions. This paper reviews empirical evidence that mergers that reduce competition will lead to price increases at both merging hospitals and their competitors, regardless of ownership status. We show that nonprofit and government hospitals have steadily become more willing to raise prices to exploit market power and discuss the implications for antitrust regulators and agencies that must approve nonprofit conversions. (+info)
HMO consolidations: how national mergers affect local markets.
The health maintenance organization (HMO) industry has undergone a wave of national consolidations in recent years. The most notable among these were between United HealthCare and MetraHealth (1995), PacifiCare Health Systems and FHP International (1996), Aetna Life and Casualty and U.S. Healthcare (1996), and Aetna and Prudential's health care unit (1999). This paper examines HMO consolidation from 1994 to 1997, looking first at concentration at the national level and then at the consequences of national consolidations for local markets. Whereas earlier mergers may have caused only a small increase in the type of local market concentration that may increase prices, later and currently proposed mergers may be motivated by considerations of increasing local market concentration. However, the concentration-increasing effect of national mergers was offset by the concentration-decreasing effect of HMO entry and growth. The analyses suggest that antitrust policy still has a role to play in ensuring that HMO markets remain open to new entry and in evaluating the effect of national mergers on local market concentration. (+info)
Merging multiple institutions: information architecture problems and solutions.
Amalgamating organizations face great challenges when trying to merge their formerly separate information systems. An architectural approach is essential in order to understand the business process and data implications of the new organization's business decisions and application choices. HL7 is useful as a common messaging standard, but does not help to reconcile conflicting local identifier coding systems. The Information Services department has an important role in catalyzing decisions about inconsistent business processes and conflicting universal coding systems within an enterprise framework. (+info)