Those conversion blues.

With the ever-increasing market penetration of capitated payment systems throughout health care markets, average payment rates for health services have dropped correspondingly. At the same time, the added competitive pressures from managed care organizations have served to increase the demand for new capital investment in information systems, lower cost facilities, and innovative modes for delivering all types of health care services. As a result, many nonprofit health care organizations have converted, or have attempted to convert, to for-profit status in an effort to gain access to the public equity capital markets. As hospitals, Blue Cross and Blue Shield organizations, and other nonprofit health care organizations across the U.S. seek to convert to for-profit status, they are finding the path is not easy. Access to capital, operating efficiencies, and the need to accelerate movement into new markets are offset by public benefit obligations, potential private inurement, and significant political cost issues. The bottom line is whether the conversion will be structured to both protect the public interest and allow the health care organization the flexibility and access to capital it needs in order to continue as a viable, competitive organization into the next millennium.     

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.     

The comparative performance of for-profit and nonprofit home health care services in the US

OBJECTIVE: To determine, by way of an exhaustive, systematic, and comprehensive review and summary of all scientific published studies, whether or not there are any performance differences between private for-profit and private nonprofit home health care providers. The second objective is to discover the proportion of all research on this topic that is devoted to home health care services compared to all other health services providers. DATA SOURCES: Computerized bibliographic searches of relevant databases and published indexes and abstracts were undertaken. They included Medline (Ovid and Pubmed versions), Web of Science (Social Sciences Citation Index and Science Citation Index), ABI/Inform, and Sociological Abstracts. Follow-up searches of reference lists in each article obtained from the computerized search were then completed. STUDY DESIGN: This systematic review retained for analysis all published studies that compared the performance of for-profit and nonprofit health care providers on access, quality, cost/efficiency, and/or amount of charity care, based on data collected after 1980. As a quality control measure only studies published in peer reviewed journals were included. Studies were coded according to the article's stated conclusions: for-profit superiority, nonprofit superiority, or no difference/mixed results. PRINCIPAL FINDINGS: The comparative performance of for-profit and nonprofit home health service organizations is one of the most understudied areas of health care provider services in the US today. Only 6 of the over 1030 comparisons of the two concerned home health care. No data on this topic have been collected since 1991, and no articles about it have been published in a peer-reviewed journal since 1995. CONCLUSION: Research on the relative performance of for-profit and nonprofit home health care services is a research priority urgently in need of attention.     

Consumer information and competition between nonprofit and for-profit nursing homes.

This paper develops implications of Arrow's hypothesis that nonprofit organizations are prevalent in health care because of quality uncertainty. The model analyzes the ability of nonprofits to mitigate market failures created by asymmetric information in an environment characterized by potential competition from both explicitly for-profit firms and for-profits in disguise (profit-motivated firms who obtain nonprofit status in order to exploit the perceived trustworthiness of the nonprofit sector). Under certain conditions, it is shown that nonprofit status can serve as a credible signal of quality and that nonprofits can decrease the underprovision of quality both by providing high quality services and indirectly via a spillover effect on quality in the for-profit sector. Applicability to long-term care and implications for empirical research and policy towards nonprofits in health care are discussed.     

Provision of sexual health services to adolescent enrollees in Medicaid managed care

OBJECTIVES: This Seattle project measured sexual health services provided to 1112 Medicaid managed care enrollees aged 14 to 18 years. METHODS: Three health maintenance organizations (HMOs) that provide Medicaid services for a capitated rate agreed to participate. These included a non-profit staff-model HMO, a for-profit independent practice association (IPA), and a non-profit alliance of community clinics. Analyses used health maintenance organizations' administrative data, chart reviews, and Medicaid encounter data. RESULTS: Health maintenance organizations provided primary care to 54% and well care to 20% of Medicaid enrollees. Girls were more likely than boys to have their sexual history taken or to be given condom counseling. Only 27% of sexually active girls were tested for chlamydia, with significantly lower rates of testing among those who spoke English as a second language. The nonprofit staff-model plan outperformed the for-profit independent practice association on most measures. CONCLUSIONS: Substantial room for improvement exists in sexual health services delivery to adolescent Medicaid managed care enrollees.     

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.     

Charitable care and the nonprofit paradigm

Nonprofit hospitals have begun to focus once again on serving the health needs of their communities. Governmental needs for additional revenue and for-profit hospitals' contention that tax exemptions give nonprofit hospitals an unfair competitive advantage have resulted in changes in laws and regulations and have caused a change in the role of nonprofit hospitals. As local governments become more responsive to the health needs of their communities, they are requiring nonprofit hospitals to become more responsive as well. Laws, regulations, and court decisions have begun to require nonprofit hospitals to provide charity care and services at levels equal to the amount of their exempt taxes. In response, nonprofit hospitals are developing community benefit programs and public health services.     

Profit-seeking, corporate control, and the trustworthiness of health care organizations: assessments of health plan performance by their affiliated physicians

OBJECTIVE: To compare the relative trustworthiness of nonprofit and for-profit health plans, using physician assessments to measure dimensions of plan performance that are difficult for consumers to evaluate. DATA SOURCE: A nationally representative sample of 1,621 physicians who responded to a special topics module of the 1998 Socioeconomic Monitoring System Survey (SMS), fielded by the American Medical Association. Physicians assessed various aspects of their primary managed care plan, defined as the plan in which they had the largest number of patients. STUDY DESIGN: Plan ownership was measured as the interaction of tax-exempt status (nonprofit versus for-profit) and corporate control (single state versus multistate health plans). Two sets of regression models are estimated. The dependent variables in the regressions are five measures of performance related to plan trustworthiness: two related to deceptive practices and three to dimensions of quality that are largely hidden from enrollees. The first set (baseline) models relate plan ownership to trustworthy practices, controlling for other characteristics of the plan, the marketplace for health insurance, and the physician respondents. The second (interactive) set of models examines how the magnitude of ownership-related differences in trustworthiness varies with the market share of nonprofit plans in each community. DATA COLLECTION: The 1998 SMS was fielded between April and September of 1998 by Westat Inc. The average time required for a completed interview was approximately 30 minutes. The overall response rate was 52.2 percent. PRINCIPAL FINDINGS: Compared with more local nonprofit plans, for-profit plans affiliated with multistate corporations are consistently reported by their affiliated physicians to engage in practices associated with reduced trustworthiness. Nonprofit plans affiliated with multistate corporations have more physician-reported practices associated with trustworthiness than do for-profit corporate plans on four of five outcomes, but appear less trustworthy than locally controlled nonprofits on two of the five measures. The magnitude of these ownership-related differences declines as the market share of nonprofit plans rises: for two of the five measures, ownership-related differences in practices related to trustworthiness are entirely eliminated when the nonprofits enroll more than 30 percent of the local market. CONCLUSIONS: The combination of for-profit ownership and multistate corporate control appears to consistently and substantially reduce physician-reported measures related to the trustworthiness of health plans. Because this is the fastest growing form of managed care, these results raise concerns about further erosion of trust in American health care. Preserving a substantial market niche for nonprofit plans appears to reduce this erosion and should be considered by policymakers as a strategy for restoring trust in the health care system.     

The curious conversion of Empire Blue Cross

The for-profit conversion of Empire Blue Cross in New York challenges the case law and conventional policy wisdom that financial assets from formerly nonprofit organizations should be used to endow independent charitable foundations. The appropriation of Empire's assets by state government itself, and their subsequent deployment to subsidize health care institutions and repay political obligations, changes the conversion process from one that pits nonprofits against for-profits to one that pits private, nonprofit organizations against public-sector programs in the competition for new financial resources.     

Home Care Workers' Assessment of Differences Between Nonprofit and For-Profit Organizations Delivering Home Care Services to the Israeli Elderly

This paper presents research findings analyzing home care workers' assessment of the differences between nonprofit and for-profit organizations delivering home care services to Israel's frail elderly. The study focuses in articular on the workers' motives for choosing a pacticular employer, their empowerment, the training and enrichment programs available to them, and their perceptions of organizational fairness and performance. Nonprofit organizatiom received higher evaluations from workers than did for-profit organizations and invested more in the management of human resources.     

An empirical comparison between the board''s strategic role in nonprofit hospitals and in for-profit industrial firms.

As the health care environment becomes more competitive, nonprofit hospitals are under pressure to adopt for-profit business practices. Based on an extensive field study, this research examines the central issue of organizational governance by comparing the strategic roles of nonprofit hospital boards with for-profit industrial boards. The results show that nonprofit hospital boards are generally more involved in the strategic decision process than their for-profit counterparts. If this governance activity is seen as desirable, hospital boards should exercise caution in emulating for-profit board practices.     

Who is enrolled in for-profit vs. nonprofit Medicare HMOs?

We compare the characteristics of enrollees in for-profit and nonprofit Medicare health plans using nationwide data from the 1996 Medicare Current Beneficiary Survey. We find few differences in overall health status, limitations in activities of daily living (ADLs), or history of chronic disease. However, older Americans enrolled in for-profit plans are substantially poorer and less educated than those enrolled in nonprofit plans, are more likely to have joined their plan recently, and are more likely to have joined a plan with the expectation of reducing their out-of-pocket health care costs.     

Long-Term Care Facility Ownership and Acute Hospital Service Use in British Columbia,Canada: A Retrospective Cohort Study

ObjectivePrevious studies report higher hospitalization rates in for-profit compared with nonprofit long-term care facilities (LTCFs), but have not included staffing data, a major potential confounder. Our objective was to examine the effect of ownership on hospital admission rates, after adjusting for facility staffing levels and other facility and resident characteristics, in a large Canadian province (British Columbia).DesignRetrospective cohort study.Setting and ParticipantsOur cohort included individuals resident in a publicly funded LTCF in British Columbia at any time between April 1, 2012 and March 31, 2016.MeasuresHealth administrative data were extracted from multiple databases, including continuing care, hospital discharge, and Minimum Data Set (MDS 2.0) assessment records. Cox extended hazards regression was used to estimate hospitalization risk associated with facility- and resident-level factors.ResultsThe cohort included 49,799 residents in 304 LTCF facilities (116 publicly owned and operated, 99 for-profit, and 89 nonprofit) over the study period. Hospitalization risk was higher for residents in for-profit (adjusted hazard ratio [adjHR] 1.34; 95% confidence interval [CI] 1.29–1.38) and nonprofit (adjHR 1.37; 95% CI 1.32–1.41) facilities compared with publicly owned and operated facilities, after adjustment for staffing, facility size, urban location, resident demographics, and case mix. Within subtypes, risk was highest in single-site facilities: for-profit (adjHR 1.42; 95% CI 1.36–1.48) and nonprofit (adjHR 1.38, 95% CI 1.33–1.44).Conclusions and ImplicationsThis is the first Canadian study using linked health data from hospital discharge records, MDS 2.0, facility staffing, and ownership records to examine the adjusted effect of facility ownership characteristics on hospital use of LTCF residents. We found significantly lower adjHRs for hospital admission in publicly owned facilities compared with both for-profit and nonprofit facilities. Our finding that publicly owned facilities have lower hospital admission rates compared with for-profit and nonprofit facilities can help inform decision-makers faced with the challenge of optimizing care models in both nursing homes and hospitals as they build capacity to care for aging populations.     

Bounceback: Blues thrive as markets cool toward HMOs

Enrollment in Blue Cross and Blue Shield (BCBS) plans has grown by almost seventeen million since 1994, and recent financial performance indicators are positive for most plans in the Blues system. These gains have been achieved by for-profit, nonprofit, and mutually owned plans. A journalistic analysis of distinctive features contributing to recent successes is offered, combining observations of financial analysts, health services researchers, and BCBS officials. Long-term stability, broad provider networks, and conservative financial management have given the Blues advantages vis-à-vis many managed care organizations that have lost market share in the same period.     

Public expectations of nonprofit and for-profit ownership in American medicine: clarifications and implications

Policymakers, advocates, and scholars frequently make claims about how the American public sees ownership affecting the delivery of medical care. In this paper we provide a comprehensive assessment of how Americans think about nonprofit and for-profit ownership. We summarize findings from surveys fielded between 1985 and 2000 and supplement them with findings from a new survey. Most Americans believe that ownership matters for multiple aspects of medical care; they expect nonprofit hospitals and health plans to be more trustworthy, fair, and humane but lower in quality. People who are better informed about ownership have more positive expectations about nonprofits' performance.     

Subsidizing health care providers through the tax code: status or conduct?

The merits of tax exemption for nonprofit health care providers have been hotly debated for decades. Mark Schlesinger and Brad Gray provide a useful, dispassionate meta-analysis of past research; they conclude that there are real differences in the performance of nonprofit and for-profit hospitals and nursing homes, although they vary along several key dimensions. Unfortunately, their findings offer no insight on whether these differences are large enough to justify a sizable subsidy and whether it makes more sense to use an undifferentiated subsidy tied to status (current practice), or a graduated subsidy tied to quantifiable and objective measures of performance.     

Home care workers' assessment of differences between nonprofit and for-profit organizations delivering home care services to the Israeli elderly

This paper presents research findings analyzing home care workers' assessment of the differences between nonprofit and for-profit organizations delivering home care services to Israel's frail elderly. The study focuses in particular on the workers' motives for choosing a particular employer, their empowerment, the training and enrichment programs available to them, and their perceptions of organizational fairness and performance. Nonprofit organizations received higher evaluations from workers than did for-profit organizations and invested more in the management of human resources.     

How nonprofits matter in American medicine, and what to do about it

Skeptics question nonprofit health care on the grounds that nonprofits fail to distinguish themselves from their for-profit counterparts and do not reliably provide community benefits commensurate with their tax subsidies. Drawing on the most recent and comprehensive evidence, we assess these charges, judging them to be either wrong or incomplete. Although conventional critiques are therefore unconvincing, there are nonetheless important challenges facing the nonprofit sector in American medicine. To address these, we propose reformulating ownership-related policies to define both the appropriate forms of community benefit and the appropriate mix of ownership in terms of local markets and communities.     

Tools for novice health care clinical administrators

With the face of health care changing at a blistering pace due to shrinking resources, advanced technology, and growing consumer demands, organizations, for-profit and nonprofit alike, have responded by flattening organizational hierarchies. Consequently, it is not an uncommon practice to promote "successful technical experts" to clinical administrator positions. Ill-prepared, rookie clinical administrators are often left struggling to manage an organization with little experience and training. Fortunately, there is help. This article will identify and apply internal and external tools that newly promoted clinical administrators can use to hurdle potential pitfalls.     

The promotion of physical activity in the United States population: the status of programs in medical, worksite, community, and school settings

While the medical care encounter is considered an ideal situation in which patients are encouraged to increase their physical activity levels, very little research has been conducted in this setting. In fact, with the exception of the physical activity components of cardiac rehabilitation programs, few formal physical activity programs are available in medical care settings. Although the workplace is currently the focus of the greatest interest by those persons who implement physical activity programs, there is little precision in defining what constitutes a worksite physical activity program. A number of researchers and authors, using program experience rather than empirical findings, have described what they believe to be the important components of successful worksites health promotion and physical education programs. The greatest variety of physical activity programs are found in community settings. They are offered by a number of nonprofit private organizations, nonprofit public agencies, and for-profit organizations. While relatively little research has been done concerning changes in the community environment, it is clear that such changes can effect community participation. Community campaigns to increase physical activity have been studied, and it appears that they clearly affect residents' interest and awareness in physical activity, but they do not have a major effect on behavioral changes in the short term. It appears that a major opportunity to influence favorable physical activity in the United States is being missed in schools. A large majority of students are enrolled in physical education classes, but the classes appear to have little effect on the current physical fitness levels of children and, furthermore, have little impact on developing life-long physical activity skills.