Introduction:
Most hospitals are broken down into three categories, for-profit, not for profit, and government organizations. Categorically, government owned and public hospitals have provided more care for the uninsured and Medicaid beneficiaries. Privatized hospitals tend to admit patients with higher reimbursement rates than patients with lower reimbursement rates, such as Medicaid. According to the American Hospital Association (AHA) there are 5,564 registered hospitals in the United States, 2,845 are not for profit hospitals, 1,034 are for-profit hospitals, and 983 are government owned, as seen in Table 1. The number of public hospitals has declined by 43% from 1980 to 2013 (McRoy, 2017). This conversion of nonprofit hospitals to for-profit hospitals has brought about public scrutiny regarding access and quality of care for the communities.
Hospital Differences and Reasons for Conversions:
Nonprofit hospitals are hospitals that are tax exempt and serve the healthcare needs of the community. While some are rooted in religious values and follow directives from their religious sponsors, many others formed as community start-ups by entrepreneurial humanitarians, nurses, and doctors. Regardless of its religious or secular mission a non-profit hospital bears a unique responsibility to the community it serves (Bales, 2016). Typically, nonprofit hospitals offer more of the trauma or intensive care units and allot the community services such as psychiatric treatments, drug and alcohol treatments, and home health care. Nonprofits tend to be located in neighborhoods with higher average incomes where more people have medical insurance. Whereas, for-profit hospitals are investor owned hospitals subject to taxes that have state of the art technologies that offer more expensive services such as diagnostics or cardiac care. For-profit hospitals tend to be in a location with higher poverty rates.
There are multiple factors that contribute to hospital conversions. The first is historical content. Most hospitals began practicing well before the changes in medical advancement. They had many beds that contributed to inpatient stays and now with one-day surgeries leading the way, these beds are not always needed. Typically, hospitals attempted to merge with out patient facilities to maintain their profits. More recently, the financial downturn of 2008, created difficulties for community hospitals to remain both financially solvent and independent. As a result about one third of hospitals experienced negative operating margins in 2008 (Mand, 2014). Which, leads to the most prominent reason for conversion: financial consideration. Nonprofits struggle with finding the funds necessary to upgrade technology or maintain existing resources, while for-profits have greater capital to invest in state-of-the-art equipment (Mueller, 2017). Some studies suggest that converted hospitals had some potential decreases in quality of care prior to conversion. Those hospitals in financial distress may have started to deteriorate in quality of care long before the conversion, which lead to the need for alteration. Assuming the conversion was due to financial difficulties studies have indicated that for-profit hospitals and nonprofit hospitals react differently to the conversion. For-profit hospitals are willing to lower their quality of care while nonprofits are likely to maintain a higher quality of care. The studies also provide results suggesting evidence that the for-profit firms are more interested in taking over the nonprofit hospitals that have a more average quality of service, thus more profitable through possible reduction of quality (Farsi, 2013).
Quality of Care:
Quality of care in hospitals is hard to define. Quality means different things to different people. Some attributes of quality in healthcare include safety, patient centered care, timely waits, effective and efficient care, accuracy, and patient outcomes. Typically, the quality of care is an intangible capacity that needs to be converted into a palpable set of data that can be analyzed and controlled. There are process indicators that measure baseline practices. Once those have been determined the outcome indicators such as, mortality rates, infection rates, safety, accuracy, and complications can be compared between the baseline and other hospitals statistics. Data can be collected through administrative data such as, health insurance claims, disease registries, medical records, and qualitative data. Once the quality measures have been determined they can be reported via public records, provider incentive programs, and accreditation and certifications. The quality information provided helps the organization make good decisions about health care and also encourages hospitals to improve the quality of health care they provide.
In some instances, the quality of care depends more on the employees and hospital policies however, in the Ridic study patient in for-profit nursing homes were given sedatives more often than those in nonprofit establishments, concluding the medication was less expensive than hiring additional staff to work with active patients. Another study reported that patient mortality rates increased after nonprofit hospital became for-profit institutions (Ridic, 2012). An institution that changes from nonprofit to for-profit status may step efforts to discourage the admission of unprofitable patients.
Meta Analysis of Quality Studies:
There has been research performed on this topic for many years. In terms of conversion of nonprofit to for-profit and vice versa as well as, change in ownership of hospitals in regards to quality of care. The quality of care is measured in mortality rates, cardiac diseases, and post-operative patients. All studies showed that the most common conversion was a nonprofit to for-profit. The conversions were related in part to a financial situation that was unmanageable. Per the Farsi study, converted hospitals may be subject to some gradual changes that potentially affect the quality of care prior to conversion. Hospitals in financial distress may have started to deteriorate in quality long before conversion. In this case even if the conversion does improve the situation, failure to control for the pre-conversion changes may lead to the conclusion that conversion resulted in lower quality. However, the results of the Farsi study states that nonprofit hospitals do not have a higher quality of care in respect to the mortality outcomes. Rather, the evidence suggests that for-profit hospital status may be associated with lower in-patient mortality rates for converted hospitals. In regards to congestive heart failure and acute myocardial infarct the conversion from nonprofit to for-profit does not have any significant effect on mortality whereas, a for-profit to nonprofit conversion results in a significant increase in mortality.
The results of multiple studies generally indicate that conversions to both for-profit and nonprofit hospital forms may have adverse effects on quality. While conversion to for-profit status is found to increase the in-hospital mortality of AMI patients, conversion to nonprofit form has increased the mortality probability in the CHF sample. These results suggest that health outcomes in different diagnoses may represent different dimensions of hospital quality. The findings also suggest that hospitals that convert from one status to another may be subject to certain changes prior to conversion and neglecting such variations may lead to a considerable bias in the estimation of conversion effects (Farsi, 2003).
In the Picone study, mortality rates increased following conversion from government or nonprofit hospitals to for-profit status. By contrast, if anything, conversions from for-profit to either government or nonprofit ownership led to a decrease in mortality as seen in Table 2. The specifications showed the conversion to a for-profit hospital led to a decrease in the quality of care. The reduction in quality was highest in the period one to two years after the conversion but overtime the quality was regained.
On the alternate spectrum, multiple studies concluded that the evidence evaluated provided no clear indication as the superiority of either hospital system regarding the quality of care and health outcomes (Devereaux, 2002). Hospitals quality of care is determined individually through each study. They also create their own ways to determine mortality, length of stay, and cardiac diseases. These biases and individuality lead to a clear understanding of the specific persons ideas on quality and not necessarily the accurate depiction of the actual care itself.
Conclusion:
Determining the quality of care based on the conversion or change in ownership of a hospital is a complex question. The studies have shown in some instances the conversion of nonprofit to for-profit hospitals shows a slight decrease in the quality of care. However, it also shows there are no changes to quality when hospitals convert. When ownership is changed in a hospital there may be a slight lapse in quality as the new owner catches up to how the hospital was initially run. When a complete conversion occurs many people are affected. Some staffing may be changed and physicians let go and acquired. These changes will affect the quality of care as it moves forward. Since a hospital conversion takes millions of intricate steps to create its extremely hard to determine where in the process the quality of care dips.
The main reason behind the conversion is what affects the status of the care. Financial downfalls may have already started to contribute to the quality offered and the only option to convert to a for-profit hospital creates the vision that because of the conversion the quality went down. It has been proven that hospitals with low margins are associated with a decline in quality of care. The quality of care is in essence based on the providers delivering that care. The indicators reviewed are a measure on how to decrease the mortality rates and decrease the length of stay. These data points don’t necessarily rank the quality of care but help to create a better environment for patients. Therefore, hospital conversion to for-profit status is associated with improvements in financial margins but not necessarily associated with differences in quality or mortality rates of patients receiving care.