Chapter 21 Not-for-profit ownership and hospital behavior

Sloan, Frank A.

doi:10.1016/s1574-0064(00)80034-7

Cited by 231 publications

(209 citation statements)

References 61 publications

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“…This can be taken as a good sign (ie, becoming a for-profit hospital does not worsen outcomes) or a bad sign (ie, improving financial performance does not lead to better outcomes). The results reported by Joynt et al are consistent with some other research, 8 although not all. Another set of studies has shown that forprofit hospitals are more likely to invest in profitable services and to avoid unprofitable services than are not-for-profit hospitals.…”

supporting

confidence: 87%

Who Benefits From Health System Change?

Cutler

2014

JAMA

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The organization of medical care is changing more rapidly now than at any point in the last century. For decades, health care was a cottage industry: physicians practiced independently or in small groups and had arms-length relationships with hospitals, imaging and laborator y facilities, and other health care entities. Those organizations alternately competed and cooperated as part of an informal local health care system.Recent years have seen the advent of large, integrated, corporate medicine. Today, the typical US city has 3 to 4 integrated health care systems, generally anchored around large hospitals and extending to suburban areas. 1 These systems are conglomerations of hospitals, primary care and specialist physicians, outpatient facilities, and postacute care facilities. There remains a fringe of unaffiliated institutions and physicians, but the number of such institutions is declining.Why is this occurring? And who benefits from it? Three reports in this issue of JAMA examine this question. Joynt and colleagues 2 examined the question of why consolidation is occurring, focusing on the conversion of not-for-profit hospitals to for-profit status. During their study period (2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010), 237 hospitals (5.2% of their sample) converted from not-for-profit to for-profit status. For each converting hospital, the authors identified up to 3 matched control hospitals based on size category, teaching status, and region. In their primary analysis, they compared clinical and economic outcomes 2 years before conversion to 2 years after conversion and used difference-in-differences models to minimize any temporary economic and clinical outcomes occurring just before the conversion and to identify changes that occurred after a reasonable period.A central finding of the study by Joynt et al was that hospitals that converted from not-for-profit to for-profit status had very poor financial performance prior to conversion. The typical converting hospital had a patient-based operating margin ([net revenue from patient care and related revenue − total operating expenses]/net revenue from patient care and related revenue) of −6.6% and a total margin ([total revenue − total costs]/total revenue), including non-patient care activities, of −1.2%. Performance at this level is clearly not sustainable. Thus, part of the rationale for conversion is to stabilize cash flow.Based on the findings of Joynt et al, hospitals converting to for-profit status were successful at this. Between 2 years before and 2 years after conversion, operating margins at converting hospitals increased by 3.2%, and total margins increased by 2.2%. Operating margins remained negative, but the hospital as a whole would break even. This improvement in margins was significantly greater for the converting hospitals than for a set of matched controls.Joynt et al were not able to determine the factors associated with cash flow improvements, but they did rule out some explanations. The authors showed that neither Medicare re...

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supporting

confidence: 87%

Who Benefits From Health System Change?

Cutler

2014

JAMA

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“…2 Vitaliano and Toren (1996), Puig-Junoy (1998), Sloan (2000), Barbetta et al (2007)), not-for-profit hospitals exhibit the same level of technical efficiency than public ones, while private hospitals are less efficient (even if we observe that they tend to converge to the efficiency of the other two types at the end of the observed period). Third, private hospitals are involved in cream skimming at a much higher rate than public and not-for-profit ones.…”

Section: Introductionmentioning

confidence: 75%

“…As stated by Sloan (2000), the main distinction between private and not-for-profit organization lies in the distribution of accounting profits. The latter do not distribute such profit.…”

Section: The Datasetmentioning

confidence: 99%

The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: A population-based investigation

et al. 2010

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In this paper we analyze the effects of some distortions induced by prospective payment system, i.e. Upcoding, Cream Skimming and Readmissions on hospitals' technical efficiency. We estimate a production function using a population-based dataset composed by all active hospitals in an Italian region, Lombardy, during the period 1998-2007. We show that cream skimming and upcoding have a negative impact on hospitals' technical efficiency, while readmissions have a positive effect. Moreover, we find that private hospitals are more engaged in cream skimming than public and not-for-profit ones, while we observe no ownership differences regarding upcoding. Not-for-profit hospitals have the highest readmission index. Last, not-for-profit and public hospitals have the same efficiency levels, while private hospitals have the lowest technical efficiency.

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“…Recent studies have challenged this view. The evidence seems to indicate no significant differences between the pricing behaviour of for-profit and notfor-profit hospitals (Sloan 2000). Not-for-profit hospitals use their market power in a way similar to for-profits: studies of not-for-profit mergers find that mergers lead to price increases.…”

Section: Differential Treatment Of Patients and Differential Responsementioning

confidence: 97%

Extending Choice in English Health Care: The Implications of the Economic Evidence

Propper¹,

Wilson

Burgess³

2006

J. Soc. Pol.

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The Centre for Market and Public Organisation, a Research Centre based at the University of Bristol, was established in 1998. The principal aim of the CMPO is to develop understanding of the design of activities within the public sector, on the boundary of the state and within recently privatised entities with the objective of developing research in, and assessing and informing policy toward, these activities. AbstractExtending choice in health care is currently popular amongst English, and other, politicians. Those promoting choice make an appeal to a simple economic argument. Competitive pressure helps make private firms more efficient and consumer choice acts as a major driver for efficiency. Giving service users the ability to choose applies competitive pressure to health care providers and, analogously with private markets, they will raise their game to attract business. The paper subjects this assumption to the scrutiny provided by a review of the theoretical and empirical economic evidence on choice in health care. The review considers several interlocking aspects of the current English choice policy: competition between hospitals, the responsiveness of patients to greater choice, the provision of information and the use of fixed prices. The paper concludes that there is neither strong theoretical nor empirical support for competition, but that there are cases where competition has improved outcomes. The paper ends with a discussion of the implications of this literature for policies to promote competition in the English NHS.

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Chapter 21 Not-for-profit ownership and hospital behavior

Cited by 231 publications

References 61 publications

Who Benefits From Health System Change?

Who Benefits From Health System Change?

The effects of upcoding, cream skimming and readmissions on the Italian hospitals efficiency: A population-based investigation

Extending Choice in English Health Care: The Implications of the Economic Evidence

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