Despite the overall slowdown in deals involving mergers and acquisitions, a new report shows the number of hospitals in for-profit hospital systems grew 1.6% in 1997.
According to data released last week by the Washington-based Federation of American Health Systems, the number of for-profit facilities in the U.S. rose by 21 to 1,331 last year from 1,310 in 1996. The number of beds controlled by those hospitals grew 4% to 183,416 from 176,150.
Thomas Scully, the federation's president and chief executive officer, said he expected the numbers to be flatter, mostly because the "hysteria" over not-for-profit conversions could have squelched even more deals.
He speculated that hospital bed counts were up because for-profit systems tend to acquire larger not-for-profit hospitals.
Over the past several years, advocates of not-for-profit healthcare spread the notion that for-profit chains led by Columbia/HCA Healthcare Corp. had embarked on a massive acquisition tear that would leave the not-for-profit sector in shambles.
Acting on that fear, many states passed laws to discourage such conversions and others investigated and even challenged such transactions to determine whether they were in the public's best interest.
Officials of the federation, which represents the investor-owned hospital sector, spent much of their time last year discussing with state lawmakers and attorneys general their concerns about state laws and investigations targeted specifically at for-profit buyers of not-for-profit facilities. The federation's position was that those actions should apply equally to for-profit and not-for-profit hospitals.
And while there wasn't a massive jump in the number of for-profit hospitals in 1997, Scully said the educational effort was worth it.
"There's no attorney general who doesn't know what the issue is now," he said. "Two years ago, if you asked an attorney general about conversions, he probably wouldn't know what you were talking about."