Communities strike back. Residents oppose ceding control to outside not-for-profit chains

"We want our hospital back!" is the rallying cry in more communities as they fight outsider not-for-profit healthcare systems for control of their local hospitals. To date, most of the policy debate has centered on acquisitions of community hospitals by for-profit chains. But the rapid development of regional systems, which merge a number of once-independent hospitals, means even more bitter clashes lie ahead involving deals with the not-for-profit sector.     

Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry

We examine the evolving structure of the US hospital industry since 1970, focusing on how ownership form influences entry and exit behavior. We develop theoretical predictions based on the model of Lakdawalla and Philipson, in which for-profit and not-for-profit hospitals differ regarding their objectives and costs of capital. The model predicts for-profits would be quicker to enter and exit than not-for-profits in response to changing market conditions. We test this hypothesis using data for all US hospitals from 1984 to 2000. Examining annual and regional entry and exit rates, for-profit hospitals consistently have higher entry and exit rates than not-for-profits. Econometric modeling of entry and exit rates yields similar patterns. Estimates of an ordered probit model of entry indicate that entry is more responsive to demand changes for for-profit than not-for-profit hospitals. Estimates of a discrete hazard model for exit similarly indicate that negative demand shifts increase the probability of exit more for for-profits than not-for-profits. Finally, membership in a hospital chain significantly decreases the probability of exit for for-profits, but not not-for-profits.     

The effect of hospital ownership choice on patient outcomes after treatment for acute myocardial infarction

I examine the effect of ownership choice on patient outcomes after the treatment for acute myocardial infarction. I find that for-profit and government hospitals have higher incidence of adverse outcomes than not-for-profit hospitals by 3-4%. In addition, the incidence of adverse outcomes increases by 7-9% after a not-for-profit hospital converts to for-profit ownership, but there is little change in patient outcomes in other forms of ownership conversion. The findings are robust, whether I use the entire sample or subsamples of hospitals that share similar hospital and market characteristics.     

营利性与非营利性医院的界定

界定营利性或非营利性医院是公共财政的需要，有利于对不同性质医院进行分类管理。该从理论上阐述了医院经济属性的基本分类，提出了一系列界定营利性与非营利性医院的条件以及实施判别的指标和方法。     

Medicare upcoding and hospital ownership

Many hospitals in the 1990s many hospitals were accused of "upcoding" patient diagnostic related groups (DRGs) to increase Medicare reimbursements. We find that between 1989 and 1996, the percentage point share of the most generous DRG for pneumonia and respiratory infections rose by 10 points among not-for-profit hospitals, 23 points among for-profit hospitals, and 37 points in hospitals converting to for-profit status. Not-for-profit upcoding was also higher in markets with a larger for-profit hospital share. Upcoding appears to reflect both risk-taking by administrators and a closer alignment between the goals of the administration and the behavior of the clinical staff.     

Hospital ownership type and treatment choices

In the face of increasing health care costs, taxing not-for-profit hospitals may be seen as the right choice to increase government revenues if not-for-profit hospitals are not different from their for-profit counterparts. This study investigates how hospital ownership type affects treatment choices to show whether ownership type and teaching status are correlated with choosing a procedure as the treatment and how these choices relate to patient insurance type. Not-for-profit hospitals significantly differ from for-profits in terms of treatment choices of less profitable patients and all hospitals are more likely to accord the procedure when the patient is privately insured than uninsured though teaching government hospitals are the most likely to accord the procedures for all insurance types. Considering treatment choices, not-for-profit hospitals have different objectives than for-profit and government hospitals and in terms of profit-seeking behavior, not-for-profit hospitals seem to lie between for-profit and government hospitals.     

'Profit' variability in for-profit and not-for-profit hospitals

This paper proposes two tests of the hypothesis that not-for-profit hospitals (NFPs) behave differently than for-profit hospitals. The profit variability test states that the profits of an NFP will be less variable over time than profits of a for-profit hospital if the NFP maximizes utility subject to a profit constraint. The second test examines whether NFP profits respond less to change in exogenous factors, such as Medicare reimbursement rates, than profits of for-profit hospitals. Both tests, performed on panel data from 1983 to 1988, support the hypothesis that NFPs behave differently than for-profit hospitals.     

Valuing hospital investment in information technology: does governance make a difference?

This article examines the investment of patient care information technology (IT) systems by a nationwide sample of U.S. short-term acute care hospitals and the resulting impact these systems have in the productivity of institutions from 1990-1998. Of particular interest is the extent to which for-profit and not-for-profit hospitals obtain different results from the adoption of lT systems. We find that the marginal effect of IT on for-profit hospital productivity is to reduce the number of days supplied, while in not-for-profit hospitals the marginal effect of IT is to increase the quantity of services supplied. This resulting effect is consistent with the differing objectives of not-for-profit and for-profit hospitals and demonstrates the positive marginal value of IT as a sustainable and prudent investment.     

Do managerial efficiency and social responsibility drive long-term financial performance of not-for-profit hospitals before acquisition?

Due to steep declines in charitable support and reduced demand for traditional hospital services, economic goals are increasingly important to not-for-profit hospitals. Effects of efficient management and effective pursuit of not-for-profit status (for example, levels of Medicare, indigent patients, and unprofitable services) on financial viability are explored. While previous research compared hospitals of different ownership status, not-for-profit hospital operations before acquisition by for-profit hospital chains are investigated--"neutral ground" relative to ownership. Results suggest minor links between efficiency and long-term profitability despite effectiveness in pursuit of non taxable status.     

If you can't beat 'em... As more not-for-profit and for-profit hospitals consider joint ventures, navigating hidden benefits and pitfalls is key to success

Joint ventures between not-for-profit and for-profit hospitals are becoming more popular. Denny Shelton, left, chairman and CEO of Triad Hospitals, says joint ventures offer Triad its greatest source of potential growth. Triad brings the capital and the not-for-profit brings the history and the brand name, he says.     

Physician goals: impact on hospital performance

Controversy prevails concerning the relative superiority of for-profit versus not-for-profit hospitals. Presented here are three variations to each of two basic theoretical models that contrast performance of for-profit and not-for-profit hospitals.     

Returns on equity for not-for-profit hospitals.

This study examines the circumstances in which a large third-party payer or regulator might want to set hospital prices to yield a positive rate of return on equity capital. The level of return is shown to depend on the willingness of donors to make funds available in the community relative to the (derived) demand for capital to produce output. It is shown that the appropriate price might well be set to yield a zero or below-market return, and that the return to not-for-profit firms should generally be less than that to for-profit firms, if for-profit firms are to be active in the market.     

Privatization of hospitals: meeting divergent interests

The United States, Germany, and the United Kingdom are experiencing a trend toward the privatization of hospitals--most frequently involving poorly positioned facilities that need: additional capital for replacement of plant and equipment; improved management systems to reduce the number of their nondirect patient care employees; and an aggressive physician recruitment effort. A number of these institutions might have been otherwise shut down, resulting in the loss of good paying jobs; however, these closures would have reduced the nation's total health care expenditures. The acquisition in the United States and Germany by investor-owned hospital corporations of major teaching institutions suggests that the for-profits have become an integral part of their country's health care delivery system. Privatization now even occurs within the egalitarian British National Health Service with the availability of private medical insurance, private hospitals, and private beds in public hospitals being managed by investor-owned groups. Being acquired by a for-profit is often a means to secure needed capital and is politically less fractious than closing down a marginally needed government-sponsored or a not-for-profit facility.     

Does Deinstitutionalization Increase Suicide?

Objectives. (1) To test whether public psychiatric bed reduction may increase suicide rates; (2) to investigate whether the supply of private hospital psychiatric beds—separately for not-for-profit and for-profit—can substitute for public bed reduction without increasing suicides; and (3) to examine whether the level of community mental health resources moderates the relationship between public bed reduction and suicide rates.
Methods. We examined state-level variation in suicide rates in relation to psychiatric beds and community mental health spending in the United States for the years 1982–1998. We categorize psychiatric beds separately for public, not-for-profit, and for-profit hospitals.
Principal Findings. Reduced public psychiatric bed supply was found to increase suicide rates. We found no evidence that not-for-profit or for-profit bed supply compensates for public bed reductions. However, greater community mental health spending buffers the adverse effect of public bed reductions on suicide. We estimate that in 2008, an additional decline in public psychiatric hospital beds would raise suicide rates for almost all states.
Conclusions. Downsizing of public inpatient mental health services may increase suicide rates. Nevertheless, an increase in community mental health funding may be promising.     

Who really profits from not-for-profits?

In a Harvard Business Review (1987) article, Herzlinger and Krasker suggested that not-for-profit hospitals do not return more benefit to society than do for-profit hospitals, and the authors questioned the legitimacy of social subsidization of not-for-profits. Our article reports findings from an empirical reconsideration of the question, "Who profits from nonprofits?" We used hospital data from the same time period (1982) as that used by Herzlinger and Krasker; however, our investigation analyzed a larger data set (including both system and nonsystem hospitals) and used a different statistical technique (discriminant analysis). Our findings suggest that not-for-profits return more social benefit (e.g., in the areas of services provided, access to care, and involvement in professional education) than do for-profits. Like Herzlinger and Krasker, we find that for-profit hospitals may be more efficient than not-for-profits. We caution that public policy regarding social subsidization of not-for-profit hospitals should be made only after more intensive study and thoughtful consideration.     

The consumer welfare implications of the hospital ownership mix in the US: an exploratory study

This paper offers an empirical test concerning how hospital ownership mix affects consumer welfare in the US. The test compares the market benefits and costs resulting from an increased presence of nonprofit hospitals by observing empirically how the nonprofit market share impacts hospital care utilization at the margin. The empirical results suggest that too many not-for-profit and public hospitals exist in the inpatient care segment of the typical hospital services industry of the US. In contrast, the empirical findings indicate that too many for-profit hospitals operate in the outpatient care portion of the hospital services industry. The policy implication is that more quality of care per dollar might be obtained by promoting increased for-profit activity to inpatient care and more nonprofit activity to outpatient care in some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research.     

For-profit hospitals: do they have a place in Europe?

This article examines the legislative and administrative approach to for-profit hospitals in the 10 member states of the European Community. When considering the hospital legislation of these states one can see that in some Hospital Acts a distinction had been made between for-profit and not-for-profit hospitals. However, there seem to be no clear legal criteria on which this distinction has been based. It is very questionable indeed whether it is at all possible to legally distinguish for-profit and not-for-profit hospitals. The legislative approaches towards for-profit hospitals in the E.E.C. vary from legal prohibition (Greece) to a neutral non-interventional attitude (Federal Republic of Germany, and Ireland). In between those two approaches lie indirect prohibition (Belgium, the Netherlands), regulation through legislation and ethical codes, rhetorical neglect (Italy), cooperation (France) and complete assimilation (Denmark).     

Comparing mission statement content in for-profit and not-for-profit hospitals: does mission really matter?

In this article, the author examined the content of mission statements in both the for-profit and not-for-profit hospital sectors. He used content analysis to compare and contrast the existence and frequency of words or phrases found in the mission statements of each sector. In particular, he analyzed the following three concepts: cost, access, and quality. The author found no significant differences in mission statement content across these three concepts when he compared investor-owned (for-profit) and nongovernmental not-for-profit hospitals. The results of this study suggest that the hospital industry lags behind other sectors in the design and development of thorough and complete mission statements. Hospital executives are encouraged to devote more time to the construction of hospital-specific and comprehensive mission statements that will provide important information for stakeholders, while simultaneously capturing the organization's unique purpose and niche in the competitive healthcare environment.     

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.     

IRS cites private inurement in sale of Florida hospital

The Internal Revenue Service has ruled that the sale of a Florida not-for-profit hospital to a for-profit corporation formed by the facility's board of directors violated federal law concerning "private inurement," thus the not-for-profit corporation's tax exemption should be revoked. The ruling would make the not-for-profit organization liable for taxes dating back to 1983.