Assessing the Impact of Privatizing Public Hospitals in Three American States: Implications for Universal Health Coverage

Abstract

Many countries with universal health systems have relied primarily on publicly-owned hospitals to provide acute care services to covered populations; however, many policymakers have experimented with expansion of the private sector for what they hope will yield more cost-effective care. The study provides new insight into the effects of hospital privatization in three American states (California, Florida, and Massachusetts) in the period 1994 to 2003, focusing on three aspects: 1) profitability; 2) productivity and efficiency; and 3) benefits to the community (particularly, scope of services offered, price level, and impact on charity care). For each variable analyzed, we compared the 3-year mean values pre- and postconversion. Pre- and postconversion changes in hospitals' performance were then compared with a nonequivalent comparison group of American public hospitals. The results of our study indicate that following privatization, hospitals increased operating margins, reduced their length of stay, and enjoyed higher occupancy, but at some possible cost to access to care for their communities in terms of higher price markups and loss of beneficial but unprofitable services.

An Exploratory Study of the Impact of Top Leadership on Effectiveness of Privatization of Hospitals Through Mergers and Acquisitions in Kenya

“…Harris, Ozgen & Ozgen (2000) showed that after a horizontal merger hospital efficiency increased and input utilization was reduced (scale efficiency). According to Villa and Kane (2013), privatization of public hospitals leads to increased operating margins, a reduced length of stay, and improved occupancy. Tiemann and Schreyӧgg (2012) investigated the impact of privatization on efficiency of hospitals in Germany.…”

“…In the U.S., a total of 1,653 hospitals were consolidated between 1980 and 2015 (Irving Levin Associates, 2012;Villa & Kane, 2013;Kaufman-Hall, 2015). Privatization of healthcare is ongoing in the U.S., Canada, Germany, India, China, Saudi Arabia and Africa (Himmelstein & Woolhandler, 2008;Martin & Dhalla, 2010;Doherty, 2011;Sinha, 2012;DeNoble, 2013;Villa & Kane, 2013;Action Platform Health and Solidarity, 2014;Hail, 2016). It is anticipated that these activities will increase in Africa and in Kenya specifically due to future demand for healthcare, a trend that occurs as a consequence generally.…”

“…Nellis (2005) states there is a need for sub-Saharan African countries to expand their private sector. Privatization of healthcare has been ongoing in the U.S. since the 1980s and studies by Shah and Mohanty (2010), Doherty (2011), Sinha (2012), Villa and Kane (2013), DeNoble (2013), Action Platform Health and Solidarity (2014) and Hail (2016) show that this trend is continuing in the U.S., Germany, India, China, Saudi Arabia and Africa/Kenya.…”

Private ownership of primary care providers associated with patient perceived quality of care

“…[33] But other studies showed that, if examined over a longer period, the improvement in privatization, as shown in hospitals in California, may be confined to services with high profit margins. [34] …”

Non-financial dimensions of measurement and assessment in the performance model for hospitals

“…Table 2 The goals of hospitals and other stakeholders for the non-financial dimensions of the performance-measurement model It is worth noting that the goals of hospitals vary by their ownership type. For instance, Villa et al (2013) underlines that for-profit hospitals have to maximize profits, whereas private non-profit hospitals must balance multiple objectives such as profits, quality of care, quantity of care, and charitable care. The goals presented in the micro perspective of the model were selected only for public hospitals.…”