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Converting hospitals – Research on impact mixed

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Two new studies of nonprofit hospitals bought by for-profit companies offer conflicting views of the effects on charity care of a transfer in ownership, the Associated Press reports.

Researchers who studied three major teaching hospitals found that charity care — as well as funding for research and education — remained stable after for-profit conversions.

The first study analyzed the impact of the sale of three teaching hospitals — St. Joseph Hospital in Omaha, Neb; Tulane University Hospital in New Orleans; and George Washington University Hospital in Washington D.C.

But a separate study of 52 public hospital sales found that 60 percent of government-owned hospitals that were sold to for-profit companies saw at least a 15 percent decline in charity care, the AP reports.

Only 23 percent of public hospitals sold to nonprofits saw a similar decline in levels of charity care.

For-profit companies say they run hospitals more efficiently and have more capital to invest in the latest technologies and medical gear. 

Critics fear that for-profit owners will cut charity care and other programs that reduce profits.

Prior studies have found mixed results on the impact of hospital conversions on charity care.  The most recent study is the first to focus on the sale of teaching hospitals.

The three teaching hospitals preserved charity services by including certain stipulations to their sale.  For example, Tulane required new owner Columbia/HCA to maintain charity care at its historical level of 5 percent. 

Laura Miller, president of Volunteer Trustees of Not-For-Profit Hospitals, warned that for-profit conversions can also take profits out of a community and fail to reinvest in the hospital’s equipment.

She said that for-profit conversions may lead to several transfers of ownership, which can undermine hospital operations. 

Both studies are being published in the March/April issue of Health Affairs, a public policy journal.

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