Not-for-profit hospitals provide more community benefits than for-profit facilities, four researchers concluded in a new report that could fuel efforts to regulate hospital conversions.
But the bulk of benefits come from public facilities and teaching hospitals, and many private not-for-profit hospitals do little to merit their tax exemption, the authors wrote.
Concluding that not-for-profit ownership is inherently valuable nevertheless, they urged policymakers to devise a minimum community benefits standard for those facilities.
The report, Converting from Nonprofit to For-Profit, is the lead article in the March/April issue of the journal Health Affairs, which is devoted to hospital and health plan conversions.
The sale of not-for-profit hospitals to for-profit chains is drawing more scrutiny lately. About 10% of hospital beds were for-profit in 1994, roughly the same as a decade ago, but the speed of conversions seems to be increasing. Historically, about nine not-for-profit hospitals become for-profit a year, but 34 conversions occurred in 1994 and 59 in 1995.
Critics of the conversions argue for-profit companies provide less charity care and other services to the community. They also fear that charitable assets are being undervalued in sales to for-profit companies, to the public's detriment.
In a review of 20 studies of ownership status and community benefits, the report concluded:
Not-for-profit hospitals provide significantly more community benefits than for-profits. The differences are particularly striking when comparisons are made within states, instead of nationally.
Public and major teaching hospitals provide a disproportionate share of benefits, however.
Prices charged by not-for-profit hospitals are generally lower than those charged by for-profits for similar services.
If taxes are counted as community benefits, for-profit hospitals outperform not-for-profit facilities.