Clarence "Larry" Thomas, M.D., had always wondered how investor-owned hospitals do it. Thomas, the chief quality officer of five-hospital St. Thomas Health Services, Nashville, couldn't figure out how for-profit hospital companies could earn operating margins of 15% and provide the same quality of care provided by St. Thomas as it struggled to maintain a 4% margin.
"We have been confounded to think that they do so," Thomas said, "and maybe the answer is, they don't."
A team of Canadian researchers has published a report that may have ended Thomas' quandary. An analysis published in last week's Canadian Medical Association Journal contends that patients at investor-owned hospitals are 2% more likely to die, compared with patients at not-for-profit hospitals. A 17-member research team at McMaster University, Hamilton, Ontario, aggregated 15 studies of hospital mortality rates in conducting their study.
The researchers found in the analysis that investor-owned hospitals had fewer skilled personnel-such as physicians, nurses and pharmacists-per bed, said P.J. Devereaux, M.D., the lead researcher and a cardiologist at McMaster. For-profit hospitals, he said, "cut corners and minimize the staffing" of skilled personnel because they have two fiscal pressures-earning good returns for shareholders and paying income taxes-that not-for-profit hospitals don't face.
Chip Kahn, president of the Federation of American Hospitals, Washington, the lobbying group for investor-owned hospitals, blasted the researchers' statistical method of meta-analysis, or aggregating a series of studies to produce results that cover a broader range of data.
"There's not a scintilla of evidence that ownership has anything to do with quality of care," Kahn said. "I don't take the study seriously. I find it preposterous."
Kahn also charged that the researchers had a political agenda because of the debate in Canada over whether to allow more for-profit hospitals to operate. "I think it's the kind of study where, when you look under the hood, you find hundreds of questions about the assumptions," Kahn said.
Devereaux said most of the studies relied on Medicare and American Hospital Association data, so the results included findings from a wide range of hospitals.
Thomas agreed there are some statistical shortcomings in the analysis-such as the lack of a control group-but added that "meta-analysis is the industry standard now. When people talk about evidence-based medicine, it's generally predicated on meta-analysis." Thomas also said a more sophisticated adjustment for acuity would study patient charts, rather than the billing codes.
"The conclusion didn't really surprise me," Thomas said. "In retrospect, it surprises me that it's been such a long time coming, and that it had to come from Canada, as opposed to internally."