Public money, private control: a case study of hospital financing in Oakland and Berkeley, California

Government support of public and private hospitals in Oakland and Berkeley, California was investigated. The private hospitals received government subsidies amounting to at least 60 per cent of their total revenues. The dollar amount of the subsidies to private hospitals was four and one-half times greater than government expenditures on the public hospital. In Oakland and Berkeley, as in many cities, public medical services have been reduced while both government health expenditures and private hospital revenues have increased sharply. The private hospitals, although all nominally non-profit, exhibit revenue maximizing behavior which results in socially unjust and medically irrational resource allocation. Funds might be found for public hospitals and clinics, and resources allocated more justly and rationally, if government expenditures in the private sector were brought under greater public scrutiny and control.