Hospitals converting to for-profit status show better financial health

Switching from nonprofit to for-profit status appears to boost hospitals’ financial health but does not appear to lower the quality of care they provide or reduce the proportion of poor or minority patients receiving care, according to a new study from Harvard School of Public Health (HSPH) and Brigham and Women’s Hospital.

“Critics of for-profit hospitals have argued that they are worse at providing good care to patients and that therefore we should limit them,” said Ashish Jha, professor of health policy and management at HSPH and senior author of the study. “Over the past decade, hundreds of hospitals have switched from being nonprofit to for-profit. Our study finds that if the public health goal is to improve hospital care, then focusing on things like for-profit or nonprofit status is a distraction.”

The study appears online October 21, 2014 in JAMA (Journal of the American Medical Association).

Jha and his colleagues undertook the study to shed light on the growing and controversial trend of nonprofit hospitals switching to for-profit status; over the past decade, more than 200 hospitals in the U.S. have switched.

Supporters of such moves have argued that becoming for-profit helps hospitals bring in needed resources and experienced management, thereby allowing them to improve the quality and efficiency of their care. Critics have argued that once hospitals become for-profit, the focus will be primarily on maximizing profits while shunning disadvantaged patients and paying less attention to providing high-quality care. But there had been little recent evidence to support either contention.