Making profits and providing care: comparing nonprofit, for-profit, and government hospitals

Three types of entities-nonprofit, for-profit, and government-own hospitals. Yet we know neither whether hospital types specialize in different medical services nor how service profitability affects specialization. In this econometric analysis of American Hospital Association data for every U.S. urban, acute care hospital (1988-2000), more than thirty services were categorized as relatively profitable, unprofitable, or variable. For-profits are most likely to offer relatively profitable medical services; government hospitals are most likely to offer relatively unprofitable services; nonprofits often fall in the middle. For-profits are also more responsive to changes in service profitability than the other two types.     

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.     

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.     

The convergence between for-profit and nonprofit hospitals in the United States

This paper proposes a novel model of the hospital industry in the United States in which firms in effect choose their ownership type and the regulatory and tax regimes under which they must function. Accordingly, I develop a model in which firms have identical objectives but differ in their ability to benefit from a given ownership form. Changes in the economic environment alter firms’ incentives to maintain a given ownership type. This in turn induces firms to modify their capacity and encourages some firms to switch ownership type. One implication of this model is that changes in the economic environment that have occurred since 1960 imply that the optimal size of those firms which choose to be for profit should more closely approximate the optimal size of firms which choose to be nonprofit. Hospital level data indicate that this size convergence has indeed occurred. In 1960, U.S. nonprofit hospitals maintained on average more than three times as many beds per hospital as their for-profit counterparts; following a monotonic decline in relative size, by 2000, the average nonprofit hospital was only 32% larger than the typical for-profit hospital. Declining roles of government hospitals, population growth, suburbanization, and increasing government intervention in the healthcare market help explain the convergence in size. Analysis of data at the state and Metropolitan Statistical Area (MSA) levels is consistent with the principal theoretical predictions.     

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.     

南方某省营利性与非营利性医院的比较分析

目的了解某省营利性医院的现状并与同等规模的非营利性医院进行比较。方法利用2002年常规卫生统计资料，使用71所有编制床位的营利性医院和同等规模的132所非营利性医院资料进行分析。结果营利性医院的人员规模小，基本上没有离退休人员的负担；提供的门急诊服务量小，但住院服务量与非营利性医院相同；收入和支出水平尚不到非营利性医院的一半，但是，能够保持收支平衡;营利性医院和非营利性医院一样存在病人欠费问题。结论在支持发展非公有制经济的政策环境下，营利性医院会有很大发展。因此，政策制定应慎重考虑可能的不利影响，并采取相应对策。     

An empirical investigation of for-profit and tax-exempt nonprofit hospitals engaged in joint ventures

Joint ventures between nonprofit and for-profit hospitals offer opportunities for collaboration to increase efficiency. These transactions have attracted the attention of the Internal Revenue Service, which may threaten tax-exempt status. This article analyzes inherent financial characteristics of nonprofit hospitals that joint venture with for-profit hospitals and those that choose not to joint venture.     

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.     

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.     

Strategic management and performance differences: nonprofit versus for-profit health organizations

Despite mixed and contradictory findings, for-profits (FPs) and nonprofits (NPs) are assumed to be similar health services organizations (HSOs). In this study, a fifteen-item scale assessing HSOs' strategic management capacity was developed and tested using fifty-seven FP and twenty NP organizations. Then, using item response theory, the items were hierarchically profiled to produce two strategic profile models, a general and an FP anchored model. We find that deviation from the general profile, but not capability attainment level, is related to two of three financial measures. We conclude that studying FPs and NPs together is appropriate.     

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.     

Strategic planning for nonprofit health care organization funding.

Nonprofit health care organizations are experiencing intense competition and difficulties in maintaining current funding levels. Too often, tactical rather than strategic use of marketing is applied in fund-raising efforts. This article presents a strategic planning model for developing constituency support and funding for nonprofit health care organizations.     

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.     

Managing for efficiency in health care: the case of Greek public hospitals

This paper evaluates the efficiency of public hospitals with two alternative conceptual models. One model targets resource usage directly to assess production efficiency, while the other model incorporates financial results to assess economic efficiency. Performance analysis of these models was conducted in two stages. In stage one, we utilized data envelopment analysis to obtain the efficiency score of each hospital, while in stage two we took into account the influence of the operational environment on efficiency by regressing those scores on explanatory variables that concern the performance of hospital services. We applied these methods to evaluate 96 general hospitals in the Greek national health system. The results indicate that, although the average efficiency scores in both models have remained relatively stable compared to past assessments, internal changes in hospital performances do exist. This study provides a clear framework for policy implications to increase the overall efficiency of general hospitals.     

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.