October 22, 2014 | FAH Hospital Policy Blog
A new empirical study released in the Journal of the American Medical Association (JAMA) sets the record straight on the issue of for-profit hospital conversion, dispelling myths about the impact of these critical efforts to maintain access to care in communities with struggling hospitals. In the study “Association Between Hospital Conversions to For-Profit Status and Clinical and Economic Outcomes,” analysis of data from for-profit hospital conversions shows that these hospitals maintain access to care, improve quality metrics, increase nurse staffing ratios, and, the study concludes, improve financial performance.
The study measured hospital performance by 3 factors: financial performance, quality of care and outcomes and measures of patient population. The scope of the analysis and the impactful conclusions should put to rest assertions of critics of for-profit conversions.
Among the key findings:
- “We found no evidence that conversion was associated with worsening care, as measured by process of care, nurse staffing, or outcomes.”
- “We also found no evidence that the improvements in financial health came through avoiding care for poor patients.”
- “Prior to conversion, we found that hospitals that would eventually become for-profit institutions were struggling financially, with negative total margins; …after conversion, there was a significant improvement in total and operating margins…. For a hospital with persistently negative margins, for-profit status may also bring access to capital and other financial resources that can lead to changes in the hospital’s economic viability.”
- “We also found no evidence that for-profit conversion was associated with any increase in Medicare payments or annual Medicare case volume or decrease in the provision of care to poor patients or to racial or ethnic minorities.”
These conclusions, which come from a comprehensive analysis of conversions in the 2000s, make clear the critical importance of the decision for a hospital to pursue for-profit status. Without conversion, struggling hospitals face diminished patient access to care, and in the worse cases, closure as many were operating with negative financial margins. Instead, by pursuing opportunities to convert, hospitals can stay open to serve their communities, patients experience no change in their access to 24/7 quality care, and hospital caregiver positions are maintained.
Critics of for-profit conversion have claimed for years that hospital conversion would harm patient care, cause job losses and lead to discrimination against low-income patients. This study dispels these claims one by one, bringing to light the reality for hospitals nationwide that have pursued this option.
In an official statement released by the FAH, President and CEO Charles N. Kahn III said, “Job one is for patients and communities to be assured that they have access to high-quality hospitals. Frequently, the alternative to the conversion of a hospital is downsizing, reduction in services or closure. This new study demonstrates conclusively that struggling hospitals that undergo conversions emerge stronger and better able to serve their patients and communities. The results dissolve myths that such changes have any negative effect on quality, service to low-income individuals on Medicaid, or to nurse or staffing levels necessary to assure the highest quality care."
Every single hospital across the country is committed to protecting patient access to care and serving their communities 24 hours a day. Hospitals that choose to meet this mission via the path of a for-profit conversion embrace the benefits of improved access to capital, experienced management, and a tradition of high quality care. This pivotal study is proof positive that conversion strengthens communities and the caregivers and hospitals that serve them.