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Original Investigation
October 22/29, 2014

Association Between Hospital Conversions to For-Profit Status and Clinical and Economic Outcomes

Author Affiliations
  • 1Department of Health Policy and Management, Harvard School of Public Health, Boston, Massachusetts
  • 2Department of Biostatistics, Harvard School of Public Health, Boston, Massachusetts
  • 3Division of Cardiovascular Medicine, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts
  • 4Division of General Internal Medicine, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts
  • 5The VA Healthcare System, Boston, Massachusetts
  • 6Currently with the US Department of Health and Human Services, Washington, DC
JAMA. 2014;312(16):1644-1652. doi:10.1001/jama.2014.13336
Abstract

Importance  An increasing number of hospitals have converted to for-profit status, prompting concerns that these hospitals will focus on payer mix and profits, avoiding disadvantaged patients and paying less attention to quality of care.

Objective  To examine characteristics of US acute care hospitals associated with conversion to for-profit status and changes following conversion.

Design, Setting, and Participants  Retrospective cohort study conducted among 237 converting hospitals and 631 matched control hospitals. Participants were 1 843 764 Medicare fee-for-service beneficiaries at converting hospitals and 4 828 138 at control hospitals.

Exposures  Conversion to for-profit status, 2003-2010.

Main Outcomes and Measures  Financial performance measures, quality process measures, mortality rates, Medicare volume, and patient population for the 2 years prior and the 2 years after conversion, excluding the conversion year, assessed using difference-in-difference models.

Results  Hospitals that converted to for-profit status were more often small or medium in size, located in the south, in an urban or suburban location, and were less often teaching institutions. Converting hospitals improved their total margins (ratio of net income to net revenue plus other income) more than controls (2.2% vs 0.4% improvement; difference in differences, 1.8% [ 95% CI, 0.5% to 3.1%]; P = .007). Converting hospitals and controls both improved their process quality metrics (6.0% vs 5.6%; difference in differences, 0.4% [95% CI, −1.1% to 2.0%]; P = .59). Mortality rates did not change at converting hospitals relative to controls for Medicare patients overall (increase of 0.1% vs 0.2%; difference in differences, −0.2% [95% CI, −0.5% to 0.2%], P = .42) or for dual-eligible or disabled patients. There was no change in converting hospitals relative to controls in annual Medicare volume (−111 vs −74 patients; difference in differences, −37 [95% CI, −224 to 150]; P = .70), Disproportionate Share Hospital Index (1.7% vs 0.4%; difference in differences, 1.3% [95% CI, −0.9% to 3.4%], P = .26), the proportion of patients with Medicaid (−0.2% vs 0.4%; difference in differences, −0.6% [95% CI, −2.0% to 0.8%]; P = .38) or the proportion of patients who were black (−0.4% vs −0.1%; difference in differences, −0.3% [95% CI, −1.9% to 1.3%]; P = .72) or Hispanic (0.1% vs −0.1%; difference in differences, 0.2% [95% CI, −0.3% to 0.7%]; P = .50).

Conclusions and Relevance  Hospital conversion to for-profit status was associated with improvements in financial margins but not associated with differences in quality or mortality rates or with the proportion of poor or minority patients receiving care.

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