Are for-profit hospital conversions harmful to patients and to Medicare?
We examine how changes in hospital ownership to and from for-profit status affect quality and Medicare payments per hospital stay. We hypothesize that hospitals converting to for-profit ownership boost post acquisition profitability by reducing dimensions of quality not readily observed by patients and by raising prices. We find that 1-2 years after conversion to for-profit status, mortality of patients, which is difficult for outsiders to monitor, increases while hospital profitability rises markedly and staffing decreases. Thereafter, the decline in quality is much lower. A similar decline in quality is not observed after hospitals switch from for-profit to government or private nonprofit status.
Picone
Gabriel
G
University of South Florida, USA. gpicone@coba.usf.edu
Chou
Shin-yi
SY
Sloan
Frank
F
D003953:Diagnosis-Related Groups; D004469:Economics, Hospital; D006742:Hospital Bed Capacity; D017052:Hospital Mortality; D006754:Hospital Restructuring / Q000191:economics*; D006777:Hospitals, Proprietary / Q000191:economics*; D006779:Hospitals, Public; D006788:Hospitals, Voluntary / Q000191:economics*; D006801:Humans; D006278:Medicare / Q000191:economics; D010067:Ownership / Q000191:economics; D010561:Personnel Staffing and Scheduling; D011787:Quality of Health Care / Q000191:economics; D014481:United States