U.S. Senator: For-profit hospitals drive up care costs

Image removed.For-profit hospitals and hospital chains change the way healthcare is delivered in the U.S., and often drive up the cost of care, according to Connecticut's junior senator.

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Sen. Chris Murphy (D) released a report late last week contending that for-profit hospitals cherry-pick the kinds of care being delivered to patients and drive up Medicare costs.

"At times for-profit hospitals are likely to prioritize their bottom line, and their mere presence in the market can pressure non-profits to prioritize revenue-generating services," Murphy said in an announcement.

About 20 percent of all community hospitals in the U.S. are for-profits, up from 14 percent a decade ago, according to Murphy's nine-page report, the "Impact of For-Profit Medicine on Medicare." Their growing presence has also altered healthcare delivery. For-profit hospitals are 7 percent more likely to offer heart surgery services--which can be quite lucrative--and 8 percent less likely to offer emergency psychiatric services, which is often a money-losing service.

In states where for-profit hospitals predominate--mostly in the Southeast and Southwest--spending per Medicare beneficiary is about 3 percent higher than in states where not-for-profits are less of a presence. There has also been a 60 percent growth surge in the number of for-profit long-term care facilities between 2003 and 2011, of which Medicare is the payer for about two-thirds of patients. States such as Oklahoma and Louisiana, which have loose regulations of new healthcare facilities, have seen dozens of them appear in recent years. Spending rose 46 percent at these hospitals in the 2003-2011 period.

For-profit hospital chains such as Prime Healthcare have been entering many states in recent years, often acquiring financially pressured not-for-profits and converting their status. That's despite ongoing controversies regarding the California-based chain's Medicare billing practices. In Connecticut, lawmakers passed a bill earlier this year that would add more oversight when a for-profit hospital purchases a not-for-profit, but also made it easier for for-profit operators to directly employ physicians.

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Moreover, Murphy claims that not-for-profit hospitals often respond to the presence of a for-profit operator in its service area by beefing up more profitable services and attempting to discourage admissions of less profitable patients.

The report recommended closer monitoring of the conversion of not-for-profit hospitals into for-profit facilities, which occurs in many states with little oversight and input from the public.

To learn more:
- read Sen. Murphy's report (.pdf)
- here's the announcement

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