Competition between non-profit and for-profit health insurers

This study investigates the effects of tax, regulatory, and reimbursement policies and other factors exogenous to the health insurance market on the relative price (to commercial insurers) paid by Blue Cross plans for hospital care, their administrative expense and accounting profits, premiums, and ultimately Blue Cross market share. We specify and estimate a simultaneous equation model to assess interrelationships among these variables. We conclude that premium tax advantages enjoyed by the Blues have virtually no effect on the Blues' premiums or their market shares. A Blue Cross plans' market share has a positive effect on the discount it obtains from hospitals as does coverage of Blue Shield charges by a state-mandated rate-setting plan. An upper bound on the effect on the Blue Cross market share of covering Blue Cross under rate-setting but excluding the commercials from such coverage is seven percentage points. Tests for administrative slack in the operation of Blue Cross plans yield mixed results.     

Nontraditional services provided by nonprofit and for-profit hospitals: implications for community health

In part because of reimbursement changes in the 1980s, hospitals became involved in health promotion and disease prevention activities often to attract patients. Today, these services may have an effect on the burden of disease and on illness prevention in some communities. Given the changes anticipated in healthcare delivery, assessing the scope of these services and integrating them with other private-public efforts is of utmost importance. Here we use a 1993 survey of all 4,977 private medical and surgical hospitals in the United States to determine the scope of disease prevention, health enhancement, and palliative services provided by facility type, geographic location, and institutional ownership. We found that church-operated and other nonprofit hospitals appear to provide a spectrum of palliative and preventive health services both for their patients and those in the local community. Given their apparent scope, these services could have an effect on the burden of disease and on illness prevention in many communities. With major changes anticipated in future healthcare delivery and the recent failures reported for many community health intervention programs, healthcare administrators need to focus on ways to integrate their services with other private and public health efforts. If this could be achieved, then private hospitals could be more successful in serving their local communities and in enhancing the public's health in the new century. This article outlines several basic steps to assist administrators in achieving these goals.     

Uncompensated care provided by for-profit,not-for-profit,and government owned hospitals

Background  

There is growing concern certain not-for-profit hospitals are not providing enough uncompensated care to justify their tax exempt status. Our objective was to compare the amount of uncompensated care provided by not-for-profit (NFP), for-profit (FP) and government owned hospitals.     

Social work in teaching hospitals and expansion of for-profit health corporations

The possibility of sale of a 175-year-old nonprofit hospital to a for-profit corporation raised questions and concerns about the future of teaching and training programs at the institution. With the many challenges facing social workers in both the nonprofit and for-profit hospitals, especially the pressures for early discharge planning and developing income producing services, social work teaching and learning opportunities in hospitals may be drastically curtailed. The author enjoins social workers to maintain social work's values and ethics as they continue the roles of administrator, clinician, teacher, learner, researcher, and, most important, advocate for social policy and change.     

Measuring community benefits provided by for-profit and nonprofit hospitals

Nonprofit hospitals are expected to provide benefits to their community in return for being exempt from most taxes. In this paper we develop a new method of identifying activities that should qualify as community benefits and of determining a benchmark for the amount of community benefits a nonprofit hospital should be expected to provide. We then compare estimates of nonprofits' current level of community benefits with our benchmark and show that actual provision appears to fall short. Either nonprofit hospitals as a group ought to provide more community benefits, or they are performing activities that cannot be measured. In either case, better measurement and accounting of community benefits would improve public policy.     

Income, location, and the demand for health care from public, nonprofit, and for-profit hospitals.

Although, empirically, for-profit hospitals serve few poor and indigent patients, they may be able to shift capital more quickly than hospitals of other ownership types, thereby spatially avoiding poor patients. However, in a market with a relatively high proportion of for-profit hospitals, spatial avoidance of poor patients is not possible because spatial competition will exist in non-poor areas. The study examines hospital choice for maternity care in a market with many for-profits using a gravity model or conditional logit. The analysis shows that poor and Medicaid populations choose for-profit hospitals overall. Income, along with distance, is an important factor in hospital choice.     

The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals

Administrative costs account for 25 percent of health care spending, but little is known about the portion attributable to billing and insurance-related (BIR) functions. We estimated BIR for hospital and physician care in California. Data for physician practices came from a mail survey and interviews; for hospitals, from regulatory reporting; and for private insurers, from a consulting company. Private insurers spend 9.9 percent of revenue on administration and 8 percent on BIR. Physician offices spend 27 percent and 14 percent, and hospitals, 21 percent and 7-11 percent, respectively. Overall, BIR represents 20-22 percent of privately insured spending in California acute care settings.     

Nonprofit to for-profit hospital transactions: all roads lead to the attorney general's office

As more and more hospitals travel the route from nonprofit to for-profit status, state attorneys general are increasingly playing the role of "traffic cop" along this rough and often contentious road. A better understanding of the attorney general's office and greater rapport with its officers is the "order of the day" for officers and directors looking to orchestrate such a transition.     

The economics of for-profit and not-for-profit hospitals

This paper examines the economics of for-profit and not-for-profit hospitals through the prism of capital acquisitions. The exercise suggests that of two hospitals that are equally efficient in producing health care, the for-profit hospital would have to charge higher prices than the not-for-profit hospital would, to break even on capital acquisitions. The reasons for this divergence are (1) the typically higher cost of equity capital that for-profit hospitals face; and (2) the income taxes they must pay. The paper recommends holding tax-exempt hospitals more formally accountable for the social obligation they shoulder, in return for their tax preference.