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

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.