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Hunted turn hunters in deals for hospitals

Published Oct. 1, 2005

The controversial proposal to convert Tampa General Hospital from public to private, non-profit status isn't as unusual as it might seem.

According to a recent national study, such conversions have been much more common than the highly publicized sales of non-profits to for-profit corporations.

The research, which appeared in the March/April issue of Health Affairs, an academic journal, also uncovered another little-reported development: Dozens of for-profit hospitals are being bought by non-profits.

"It's not just for-profits taking over the market," said Jack Needleman, lead author of the study and an assistant professor at the Harvard School of Public Health.

Locally, board members of Tampa General Hospital are scheduled to consider privatizing the public hospital next Wednesday. But TGH's proposed conversion to private status comes with a twist: Though the hospital would become nonprofit, it is considering a management agreement with Tenet Healthcare Corp., the nation's second-largest for-profit hospital chain.

The proposed management link between a non-profit and for-profit hospital corporation, which was not studied by Needleman, has raised concerns about TGH's continued ability to care for the poor.

The fast-paced buying and selling of hospitals around the country is being fueled by today's hard-nosed economics of health care, Needleman said. Health maintenance organizations are slashing the rates they pay to hospitals while ratcheting down the number of days patients can stay.

Stuart Altman, a professor of health policy at Brandeis University and author of a companion paper to Needleman's, agreed: "To say the hospital world is the same is wrong. It is a different world, but it's not the issue of for-profit versus not-for-profit. The issue is the incredible amount of price competition that exists in the industry today."

The survey results are the latest contribution to a highly charged debate over the merits of for-profit medicine. Critics charge that for-profit hospitals tend to avoid unprofitable but needed services and shirk the responsibility of caring for the poor.

Advocates of for-profit hospitals dispute those charges and say nonprofits behave just like their for-profit rivals, except the non-profits don't pay income taxes.

The debate has taken on urgency with the rapid growth of for-profit hospital chains like Columbia/HCA Health Care Corp., which owns 14 hospitals in Tampa Bay and is the largest hospital chain in the country.

The Needleman study tested the widely accepted premise that profit-making hospital companies are gobbling up non-profits nationwide. It looked at American Hospital Association data on more than 5,000 hospitals, evaluating conversions from 1980 to 1990, and 1990 to 1993.

One in 10 hospitals changed hands between 1980 and 1990, but only 21 percent of the 532 conversions were from non-profit to for-profit. Another 14 percent were public hospitals bought by for-profit companies.

The biggest category of conversions, 42 percent, involved public hospitals changing to non-profit status.

From 1990 to 1993, conversions of public hospitals to non-profit status also led the pack, accounting for 28 percent of the 183 conversions.

Needleman's study found that five states _ Florida, Alabama, California, Georgia and Texas _ had unusually high rates of conversion. Needleman attributed that to a lack of adequate regulatory oversight in those states. As a result, he said, community involvement usually comes too late to stop such transactions.

According to Needleman, there are two main factors motivating public hospitals to go private.

"One is the sense that public ownership creates some rigidities in management and makes it difficult to respond to the fast-changing health-care environment," he said.

"And many of these conversions are associated with a reduction of public support. In that sense, they represent a retreat from local public commitment to support health services for those who can't pay for themselves and that's troubling."

Despite the large numbers of public hospitals that have changed status in the past 13 years, Needleman said, there is no known research on the impact of such conversions on indigent care.

"That's the great undone study," he said.

_ Information from the Boston Globe was used in this story.