When not-for-profit hospitals switch to for-profit status, their finances may improve but the quality of care they deliver remains about the same, concludes a new study published in the Journal of the American Medical Association.
Karen Joynt, M.D., of the department of health policy and management, Harvard School of Public Health, and her colleagues zeroed in on 237 not-for-profit hospitals that had struggled under this status and became for-profit institutions. Joynt and her team examined Medicare and Medicaid data from between 2002 and 2010.
"We did not see that there were higher mortality rates, even for vulnerable populations like the disabled," Joynt said. "Nor did we find that quality suffered in the ways that we could measure quality."
Meanwhile, the hospitals that switched to for-profit status were able to improve their margins at a far better rate than the 631 institutions that were compared as a control group.
Hospitals may see an upside to their bottom line by converting because most join larger systems, which tend to have greater bargaining power for equipment and supplies and have usually consolidated administrative costs, U.S. News and World Report noted.
The converting hospitals "stabilized a bunch of institutions that were not financially stable, and they did not hurt patients. On net, I put that on the good side of the ledger," Harvard healthcare economist David Cutler wrote in an accompanying editorial in JAMA. However, Cutler warned that the profit motive tends to bear little relation to actual social utility--such as improving patient care.
For-profit hospitals have come under some criticism for driving up overall healthcare costs and cherry-picking patients and focusing on profitable service lines while shortchanging other needed services. To address such concerns, Connecticut recently passed a law that provides closer monitoring of for-profit facility conversions in the state.