For-profit companies control one-fourth of the hospital market in Tennessee, and if the Hospital Alliance of Tennessee has its way, that's all they're going to get.
The Nashville-based group, which represents more than 80 not-for-profit hospitals in the state, drew a line in the sand last week with the release of a 48-page report that says not-for-profits provide far more care to the poor than do for-profit hospitals in Tennessee.
A spokeswoman for the Tennessee Hospital Association, which represents both for-profit and not-for-profit hospitals, said the association hadn't seen the report and couldn't comment.
R. Clayton McWhorter, chief executive officer of Healthtrust, the Nashville, Tenn.-based for-profit hospital chain, described the study as "distorted." He said the selection of hospitals for the study appears to have been biased. "There are plenty of Tennessee not-for-profit hospitals that have charity-care numbers very similar to those of investor-owned."
But the alliance is well aware of the for-profit hospital sector and has seen the tactics that some chains have used against not-for-profit acquisition targets, said Elliott Moore, the alliance's president. And this time, not-for-profits want to get in the first lick, she said.
Last fall, for example, Columbia Hospital Corp., the nation's largest for-profit hospital chain, issued a report that criticized the community benefits provided by seven Florida not-for-profits, four of which were competing with Columbia for a contract to provide care to employees of Lee County, Fla. (Nov. 1, 1993, p. 3).
Also last fall, Hospital Corporation of America, which later merged with Columbia, ran a series of newspaper ads that touted the tax benefits the local community would enjoy if Holston Valley Medical Center, a not-for-profit facility in Kingsport, Tenn., agreed to be acquired by HCA (Dec. 6, 1993, p. 3).
"It's an educated guess that, based on past behavior, this won't be confined to Florida and Kingsport," Ms. Moore said.
The pending merger between Columbia/HCA and Healthtrust would give the combined company control of hospitals in Tennessee (Oct. 10, p. 10).
In the report, the alliance compared the charity-care, bad-debt and Medi-caid shortfall expenses incurred by 81 not-for-profits with those of 44 for-profit hospitals in Tennessee.
It also provided detailed comparisons of not-for-profit and for-profit hospitals in three specific markets: Chattanooga, Nashville and the Tri-Cities region of northeast Tennessee.
Statewide, not-for-profit hospitals provided a per-hospital average of $3.5 million in charity care last year, compared with just $192,464 per for-profit hospital, the report said.
Not-for-profits also incurred twice as much bad-debt expenses and Medicaid payment shortfalls (See chart, p. 20).
Similar discrepancies between not-for-profits and for-profits existed in the three markets, the report said.
The report's figures are based on data from Tennessee's health department, but they're based on hospital charges, not actual costs.
The figures also weren't adjusted for hospital size. The not-for-profit hospitals in the report had an average licensed bed size of 251. The average for-profit hospital in the report had 123 licensed beds.
The purpose of the report is twofold.
First, it will help communities understand what's at stake when a for-profit chain comes knocking at the door of their local not-for-profit hospital wanting to buy it, Ms. Moore said.
And, it will help the alliance argue against any state legislative attacks on the tax exemptions of not-for-profit hospitals launched by the for-profit hospital sector, she said.