- According to a new study in JAMA, hospitals that transitioned to for-profit status in the 2000s saw better financial health but no change in quality of care, mortality rates or the proportion of poor or minority patients treated.
- The study looked at 237 hospitals undergoing the transition and 631 control hospitals. The participant patient mix included 1,843,764 Medicare fee-for-service beneficiaries at the transitioning hospitals and 4,828,138 patients at the control hospitals.
- Converting hospitals improved their margins by 2.2% versus 0.4% at the control hospitals. Both groups showed similar performance on process quality indicators and both improved process quality metrics. Mortality rates did not change at converting hospitals, not did the percentage of patients with Medicaid or the percentage of patients who were black or Hispanic.
The swap to for-profit status is often a controversial one. Proponents say it provides needed resources and experienced management that allows institutions to provide better quality and more efficient care. Critics believe it will misalign incentives and that new for-profit organizations will shun disadvantaged patients for the privately-insured in order to meet financial metrics. Still, according to the JAMA article, there is little contemporary research to back up either claim.
David M. Cutler, Ph.D., of Harvard University, remarks that the findings must be taken in historical context:
"The data from the 3 studies reported in this issue of JAMA are all from the period when payments were largely on a fee-for-service basis and patient cost sharing was relatively low," Cutler writes. "These findings may not necessarily translate to the current rapidly changing environment, in which payments are increasingly rewarded on a value basis, not a volume basis, and in which patients have significant cost sharing for services received. Such a payment system could lead to more systematic cost savings."