There is legitimate concern in health care regarding whether for-profit providers deliver as good quality as non-profit ones do. Such companies may face conflicting incentives. On the one hand, cutting corners and stinting on care may improve margins; on the other hand delivering poor quality likely would lead to fewer patient visits and lower revenues. A Journal of the American Medical Association looked at about 237 hospitals that converted from non-profit to for-profit status in the period 2003 to 2010. (JAMA Article) These hospitals were compared to a cohort of 631 hospitals that stayed non-profit. The researchers measured financial performance, quality performance and any changes in patient population served. The converting hospitals were more likely to be small or medium, located in the south and in a metropolitan area than were non-converting ones. Hospitals that converted had lower total and operating margins before conversion than did the control hospitals, and after conversion, their margins improved more than did those for the controls. This suggests that conversion was driven by poor financial performance at least in part and that becoming for-profit did help hospitals become more financially stable. Based on standard Medicare process of care quality measures, the converting and non-converting hospitals had similar performance prior to conversion and after and showed similar rates of improvement over the study period. Nursing staffing ratios were also similar between the cohorts and over time. Thirty-day, risk-adjusted, all-cause mortality rates had no difference between the study groups at baseline and the rates of improvement for converting and non-converting hospitals were nearly identical. Patient volume remained similar after conversion. There were no differences after conversion in the proportion of patients who were Medicaid-eligible, black or hispanic. Prior to conversion, the converting hospitals had a higher proportion of care provided to the poor and they continued that trend after conversion. So whatever the explanation may be, it appears that converting to for-profit status was a positive event, with no adverse quality effects and greater financial stability, which likely meant more financial resources to provide better care for patients.
Hospital Conversions to For-Profit Status
By Kevin RocheOctober 30, 2014Commentary
✅ Subscribe via Email
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
Another example of over-priced companies trying to find some way to survive in the post-epidemic financial world. Transcarent, which does something, somehow to “access high quality, affordable care” is buying...
March 6, 2023
In an attempt to swiftly revive two floundering health care companies, a PE firm has announced the merger and recapitalization of Revive Health and SwiftMD. You know they are...
January 30, 2023
Investors have not yet learned their lesson, as Pearl Health gathers a new round of $75 million in capital for its business of supporting physicians who want to participate in...
January 30, 2023
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace
March 27, 2023
Why You Can’t Trust People Who Make Up Stuff About Vax Safety
A couple of studies offer a far better explanation for heart issues in athletes and…
March 25, 2023
Coronamonomania Lives Forever, Part 201
Tired of March Madness? A boringly refreshing dip into some CV-19 research summaries is recommended.
March 24, 2023
The CDC Is a Font of Methodological and Statistical Error
Several times in the last three years I and others have pointed out serious flaws…