After the first for-profit hospital chain began operating in Nashville in the late 1960s, not-for-profit hospital leaders feared companies such as Hospital Corporation of America and other for-profit upstarts were coming to take over their world.
Today, those fears are a distant memory.
Fifty years after establishing the Federation of American Hospitals to represent their interests in Washington, for-profit hospitals have established a large and stable market niche, with dominant positions in certain Sunbelt markets. They have moved past fraud scandals and most criticisms about their business practices to gain broad respect for their ability to operate hospitals efficiently while achieving solid performance on quality and safety.
On the flip side, federation leaders no longer have to spend their time justifying the existence of for-profit hospitals, as the federation's first Washington-based leader, Mike Bromberg, had to do. “We were a pariah to a lot of liberals who wanted to ban them,” said Bromberg, who served as the association's CEO from 1969 to 1994 and remains vice chair of the board. “Now we've sort of proved ourselves, and it's recognized that for-profit hospitals give consumers choices.”
Some analysts say the for-profits have even helped their not-for-profit competitors by forcing them to tighten their management practices and up their game. “The firms you see today are actually held to somewhat higher standards than their not-for-profit competitors in their economic dealings with physicians, because of the past regulatory scrutiny,” said Jeff Goldsmith, a national adviser to Navigant Healthcare and associate professor of public health sciences at the University of Virginia.