The article "Proprietary hospitals shifted more '94 cost" (April 29, p. 8) misinterprets some critical facts on hospital costs.
The basic conclusion of the article, that investor-owned hospitals "shifted 15 cents more for every dollar of cost to private payers than not-for-profits did," is based on-and grossly misinterprets-the fact that the 1994 payment-to-cost ratio of investor-owned hospitals appears to be 15 cents higher than it is for not-for-profits (1.43 vs. 1.28). If one knew only this, one could incorrectly conclude that investor-owned hospitals are charging more than their not-for-profit counterparts and are thereby "shifting" more costs to private payers. But even the author points out that the difference in the ratios is largely because of the lower costs achieved by investor-owned hospitals. Payments by private payers to hospitals are roughly the same regardless of hospital ownership. Investor-owned facilities just have lower costs.
In the Medicare program, because of extra teaching and disproportionate-share payments, the average not-for-profit typically is reimbursed at higher levels than investor-owned hospitals. Still, because of lower costs, investor-owned hospitals suffered smaller losses on Medicare than did not-for-profits. There is no rational basis for implying, as the article does, that this contributes to cost shifting.
Investor-owned hospitals, like all hospitals, recognize their responsibilities to the communities they serve. As a result, it's not surprising to see that investor-owned hospitals provide almost as much uncompensated care-4% vs. 4.5% of total costs-as do not-for-profits. Your article failed to note or comment, however, on the fact that 1993-1994 data from the Prospective Payment Assessment Commission show an 8% increase (from 3.7% to 4%) in the amount of uncompensated care provided by investor-owned hospitals, while over the same period the amount not-for-profits provided (as a share of total costs) did not change.
THOMAS A. SCULLY
President, chief executive officer
Federation of American Health Systems, Washington