Going For-profit: Patient Outcomes Hold Steady

Concerns that conversion of hospitals from not-for-profit to for-profit status compromises patient outcomes appear to be unfounded.

As part of a larger trend of accelerated hospital consolidation, an increasing number of not-for-profit (NFP) hospitals are aligning with or converting to for-profit entities. With lower revenues, higher expectations on quality and rising health IT costs, NFP hospitals are not only open to consolidation, but actively pursuing it. In particular, small- and mid-sized NFP hospitals are trying to attract for-profit suitors, according to Dixon Hughes Goodman’s 2013 Mergers & Acquisitions Winter Report.

In the 1990s, when a similar wave of consolidation hit the healthcare industry, some studies hinted at a disproportionate number of acute MIs at for-profits compared to NFPs, says Karen Joynt, MD, of Brigham and Women’s Hospital in Boston. However, the latest studies point to little discrepancy between outcomes across these two groups.

At 216 hospitals that converted to for-profit status between 2002 and 2010, there was no change in their process score for acute MI during the year after conversion, according to a preliminary study co-authored by Joynt (J Am Coll Cardiol 2013;61[10-S]). Moreover, no differences appeared in acute MI mortality rates, readmission rates or in the proportion of care provided to the disadvantaged.

Times have changed since the 1990s, says Joynt. With trends in accountable care, pay for performance and quality improvement shaping healthcare, poor performance will not go unnoticed. “You can’t get away with that anymore,” she says.

Joynt shares a conclusion reached in the 2013 M&A report: NPFs often align with for-profits for access to capital and financial expertise. She notes that for-profits often have the ability to acquire game-changing health IT products that may be financially out of reach for NFPs. Adherence to clinical guidelines, buffered by technology, promotes stronger performance, she says.

In a study of approximately 1.1 million patients who underwent PCIs in 471 NFP hospitals, 131 teaching hospitals and 79 for-profit hospitals, the percentage of patients experiencing one or more adverse outcomes was about the same at NFP hospitals (4.1 percent) and for-profit hospitals (4.3 percent) (Am Heart J 2012;163:222-229.e1).

“When you looked at physician-owned hospitals, major teaching hospitals, not-for-profit hospitals, for-profit hospitals, indications for PCI in them were generally similar as a group. But that doesn’t mean that there aren’t some bad characters in those groups,” says lead author Peter Cram, MD, MBA, at University of Iowa Hospitals and Clinics in Iowa City.

While the study found a small proportion of PCI procedures in patients with unclear indications, Cram says, “It’s unclear to me if that’s driven by whether you are for-profit or non-profit at all.”

Crams notes that NFPs pay significantly less in taxes compared with for-profit counterparts. “The taxes that for-profit hospitals pay more than cover any ‘cherry picking’ that they do,” says Cram. “So, conversely, there is increasing concern in 2013 that the real problem is the not-for-profit hospitals and that they receive enormous tax breaks with little to no guarantee that they provide more charity care or provide higher quality.”

He cites one national study that found the level of community benefits varied widely among NFP hospitals (N Engl J Med 2013; 368:1519-1527). “Many of them may not be providing the community benefit that they should be," he says.