For-Profit Conversion Can be a Negative for Uninsured and the Community

Study of the impact of hospital ownership changes on the health care delivery system

From September 1997 through January 2003, researchers at Brandeis University, Heller School for Social Policy and Management, Cambridge, Mass., studied how a change in ownership from nonprofit to for-profit status ("conversion") affected hospitals' provision of community benefits, financial performance and relationships with other health care providers.

The project included a nationwide study of all 709 hospital conversions between 1990 and 2001 as well as in-depth case studies of eight hospitals.

Key Findings

  • Uncompensated care levels dropped when a nonprofit hospital converted to for-profit ownership.
  • The largest decrease in uncompensated care occurred when nonprofit hospitals converted to for-profit chain-owned facilities.
  • According to case-study respondents, conversion affected the hospital's collaborative and competitive behavior toward other providers and organizations in the community.
  • Conversion foundations, formed from the sale of nonprofit hospitals, sometimes maintained or exceeded the nonprofit's financial contribution, but they did not substitute for the hospital's role as a community partner.
  • Drawing conclusions about whether hospital conversions are a good or bad policy is difficult because conversion affects each community differently.

Funding

The Robert Wood Johnson Foundation (RWJF) provided $926,085 to support this project between September 1997 and January 2003.