After not-for-profit hospitals convert to for-profit status, they spend less on care to the poor, according to a study to be published this week in the journal Health Affairs.
In the same November/December issue, however, a second study questioned the level of community benefits not-for-profit hospitals provide in exchange for their tax-exempt status.
The authors of the second study said it was supported by a grant from the Federation of American Hospitals, which represents for-profit hospitals.
However, Thomas Scully, the federation's president and chief executive officer, said the $90,000 grant was actually made for another research project tracking indigent care at specific hospitals. When the federation pulled the plug on that study after its board decided that the topic was "irrelevant," it didn't take back its grant, he said.
Regardless, Scully said the question of what impact ownership conversions have on community benefits is not easily answered. "It all depends on how you want to spin it," he said. "The reality is it depends on what you measure."
The effect of hospital conversions on uncompensated care and other community benefits is a much studied and debated topic that often produces conflicting results (See box).
In the first of the two new studies, researchers found that when not-for-profit hospitals converted to for-profit status, the amount of uncompensated care they provide declined to 4.7% of total expenses compared with 5.3% as a not-for-profit. The difference amounts to a hospital spending, on average, about $400,000 less annually on uncompensated care.
Uncompensated care includes both charity care and bad debt.
The study by researchers at Emory University, Atlanta, and Tulane University, New Orleans, was based on data from 127 private not-for-profit and 35 public hospitals that converted to for-profit status between 1991 and 1997.
The study was supported by a grant from the Robert Wood Johnson Foundation.
Both Emory and Tulane have a relationship with a for-profit hospital provider.
Emory Healthcare, the university's healthcare system, has a partnership with Nashville-based HCA-The Healthcare Co. to manage some clinical operations at HCA's seven hospitals in the Atlanta metropolitan area. And HCA has a joint venture with 326-bed Tulane University Hospital and Clinic, New Orleans.
Meanwhile, researchers in the second study developed a model for quantifying the amount of community benefits a not-for-profit hospital should provide.
They said a not-for-profit--because it doesn't have to generate a profit for shareholders--should provide community benefits equal to those provided by a similar for-profit hospital plus the for-profit hospital's profits.
Community benefits from for-profit hospitals should include the payment of property and income taxes, said Mark Pauly, one of the study's authors and a professor at the Wharton School of the University of Pennsylvania.