The Effect of Hospital Ownership Conversions

The overall effect of hospital ownership conversion from public to private will be significant in terms of community benefits.

From September 1997 through January 2003, researchers at Brandeis University, Heller School for Social Policy and Management, Cambridge, Mass., studied how a change in ownership from nonprofit to for-profit status ("conversion") affected hospitals' provision of community benefits, financial performance and relationships with other health care providers.

The project included a nationwide study of all 709 hospital conversions between 1990 and 2001 as well as in-depth case studies of eight hospitals.

The result was published by The Robert Wood Johnson Foundation (RWJF) in Oct 3, 2005.

Key Findings

• Uncompensated care levels dropped when a nonprofit hospital converted to for-profit ownership.

• The most significant decreases in uncompensated care occurred when not-for-profit hospitals converted to for-profit chain-owned facilities.

• Conversion affected the hospital's collaborative and competitive behavior toward other providers and organizations in the community.

• Conversion hospitals, may exceeded the nonprofit counterparts in terms of financial contribution, but they did not substitute for the hospital's role as a community partner.

I also think the impact of decreasing public hospitals due to conversion to private ones will reduce the levels of community benefit activities, since these are generally thought to be unprofitable and therefore incompatible with for-profit hospitals’ presumptive goal of profit maximization.

The community will come up short—uninsured and low-income people receive less care, all patients have reduced access to specialized emergency services, and society-at-large foregoes the benefits of medical education and research.