Hospitals that have converted to for-profit status do not have significantly different financial or staffing profiles than their not-for-profit brethren, according to a study funded by the Federation of American Health Systems.
The study from the federation, a trade group that represents for-profit hospitals, comes on the heels of two studies that claim for-profit hospitals are less efficient than not-for-profits. The first was by longtime critics of for-profit healthcare (March 17, p. 2), and the second was by VHA, an alliance of not-for-profit hospitals (May 26, p. 8).
The federation's study, which was prepared by the Project Hope Center for Health Affairs, found that before their conversions, not-for-profit hospitals purchased by investor-owned chains typically had more staff per patient and had lower profit margins than other hospitals.
After being purchased by investor-owned chains, their profitability improved and staffing levels dropped to industry averages, the study said.
For much of the drop in staffing levels, the study cited a consolidation of management positions or a shift in those positions from the local hospital to corporate headquarters.
But the study's more in-depth analysis of eight hospitals that converted from not-for-profit to for-profit status found some facilities cut nursing staff. The statistical analysis was unable to differentiate between cuts in clinical and administrative staff.
Project Hope prepared a statistical analysis of 87 hospital conversions between 1988 and 1995-more than half of them taking place between 1993 and 1995-and eight case studies of not-for-profit hospitals' conversion to for-profit status.
The study shows "the differences between investor-owned and not-for-profit hospitals are overblown," said Thomas Scully, president of the federation.
He said the study, which cost $412,000, did not intend to say conversion to for-profit status was necessarily superior to merging with other not-for-profit hospitals.
"I think the evidence shows that both routes can be correct," Scully said.
But William Cox, executive vice president of the Catholic Health Association, said it doesn't take a for-profit conversion to bring a struggling institution back to life. He said the same improvement in finances and reduction in staffing can occur when not-for-profit institutions merge.
Linda Miller, president of Volunteer Trustees of Not-for-profit Hospitals in Washington, was critical of the study: "The study doesn't address costs, and it doesn't address quality."