Ownership and Organizational Performance

BackgroundThere is growing concern certain not-for-profit hospitals are not providing enough uncompensated care to justify their tax exempt status. Our objective was to compare the amount of uncompensated care provided by not-for-profit (NFP), for-profit (FP) and government owned hospitals.MethodsWe used 2005 state inpatient data (SID) for 10 states to identify patients hospitalized for three common conditions: acute myocardial infarction (AMI), coronary artery bypass grafting (CABG), or childbirth. Uncompensated care was measured as the proportion of each hospital's total admissions for each condition that were classified as being uninsured. Hospitals were categorized as NFP, FP, or government owned based upon data obtained from the American Hospital Association. We used bivariate methods to compare the proportion of uninsured patients admitted to NFP, FP and government hospitals for each diagnosis. We then used generalized linear mixed models to compare the percentage of uninsured in each category of hospital after adjusting for the socioeconomic status of the markets each hospital served.ResultsOur cohort consisted of 188,117 patients (1,054 hospitals) hospitalized for AMI, 82,261 patients (245 hospitals) for CABG, and 1,091,220 patients for childbirth (793 hospitals). The percentage of admissions classified as uninsured was lower in NFP hospitals than in FP or government hospitals for AMI (4.6% NFP; 6.0% FP; 9.5% government; P < .001), CABG (2.6% NFP; 3.3% FP; 7.0% government; P < .001), and childbirth (3.1% NFP; 4.2% FP; 11.8% government; P < .001). In adjusted analyses, the mean percentage of AMI patients classified as uninsured was similar in NFP and FP hospitals (4.4% vs. 4.3%; P = 0.71), and higher for government hospitals (6.0%; P < .001 for NFP vs. government). Likewise, results demonstrated similar proportions of uninsured patients in NFP and FP hospitals and higher levels of uninsured in government hospitals for both CABG and childbirth.ConclusionsFor the three conditions studied NFP and FP hospitals appear to provide a similar amount of uncompensated care while government hospitals provide significantly more. Concerns about the amount of uncompensated care provided by NFP hospitals appear warranted.

I. INTRODUCTION The prevalence of for-profit hospitals has increased in the United States over the past few decades. The emergence of for-profit hospitals that often compete in markets with not-for-profit hospitals has generated vigorous academic and policy debates about the implications of the distinct legal and organizational for-profit and non-profit forms on hospital behavior. The main issues arise from differences in monetary and non-pecuniary incentives for administrators and physicians that are associated with organizational form, including variations in tax treatment, access to capital markets, and governance structures. These debates center on two possible outcomes related to organizational form and ownership mix. One is whether these differences lead to observable differences in revenues and costs as well as the quantity, quality, and mix of services provided by for-profit and non-profit hospitals (NPHs). The other possible outcome is whether competition from for-profit hospitals in the same markets as NPHs coupled with persistent cost-containment efforts of public and private insurers, results in a form of convergence where NPHs behave similarly to for-profit hospitals despite differences in organizational form. This notion of convergence that has arisen in the literature on performance in the hospital industry has called into question both academically and for policy makers the tax benefits that NPHs enjoy on the grounds that NPHs are indistinguishable from for-profit hospitals and fail to provide community benefits at a level sufficient to justify the subsidies. (1) The ongoing debate about whether NPHs behave differently from for-profit hospitals has given rise to a substantial empirical literature seeking to inform the debate. Schlesinger and Gray (2006) and Rosenau (2003) comprehensively reviewed the empirical evidence on the performance differences between for-profit and NPHs. Performance is evaluated along several dimensions including economic measures like cost per admission, revenue or charge per admission, technical efficiency, non-pecuniary measures like quality, provision of care to indigent patients, and trustworthiness of organizational practices. Both reviews conclude that ownership-related differences in hospital behavior and outcomes are mixed. Schlesinger and Gray reviewed 162 empirical studies comparing non-profit and for-profit hospitals and nursing homes along the dimensions of economic performance, quality of care, and indigent patients' access to care. (2) In terms of economic performance, 18 studies found no significant differences between for-profit and NPHs; 10 studies found an advantage for profit-making hospitals (PMHs); and 30 found an advantage for NPHs. Twenty-one studies reported no significant differences between for-profit and NPHs in terms of quality of care, whereas 4 studies found higher quality of care in for-profit hospitals, and 19 studies found higher quality of care in NPHs. Rosenau synthesized the results of approximately 75 peer-reviewed studies published between 1985 and 2001 along quality, cost, access, and charity care dimensions. (3) In terms of cost, 23 studies found NPHs to be superior, 5 studies found for-profit hospitals to be superior, and 9 studies were inconclusive. Twelve studies found that NPHs provided higher quality care, 3 studies found quality of care to be higher in for-profit hospitals, and 9 studies found no differences in quality. Their finding that evidence of ownershiprelated differences in cost, quality, profits, pricing policies, technical efficiency, access to care, and service offerings vary greatly across empirical studies is not surprising because the studies themselves vary in terms of data used and statistical methods. The empirical approach taken in the majority of the studies is to estimate a reduced-form model of hospital characteristics that typically includes an indicator variable for ownership status as a control variable. …

THIS paper derives and tests some implications about differences in behavior resulting from differences in property right arrangements, and in particular, between proprietary for-profit and nonproprietary not-for-profit hospitals (hereafter referred to as proprietary and nonproprietary hospitals respectively) . The arrangements in nonproprietary nonprofit enterprises are different from those in proprietary profit-seeking organizations because (1) certain rights or claims to benefits in nonproprietary organizations are not transferable by sale as they are in proprietary organizations, and (2) managers or workers in nonprofit organizations do not have exclusive claim on residual products (the current flows of money and nonmoney benefits) that is characteristic of for-profit enterprises.

Background: Teaching hospitals have to balance patient and learner needs in their daily routines. To respond to these challenges, non-profit hospitals may perform differently than public and for-profit hospitals because of their non-distribution constraint. Purposes: This study analyzes patient satisfaction data of non-profit teaching hospitals in comparison to teaching hospitals with for-profit and public ownership status. Patient satisfaction is assumed to be an indicator of how patient needs are met regardless of the teaching goals. Approach: The average patient satisfaction ratings for German hospitals (n = 1461) that were published on the ‘klinikbewertungen.de’ German hospital rating platform were collected for a cross-section analysis. Findings: The data show that non-profit teaching hospitals are better rated than for-profit and public teaching hospitals. Non-profit hospitals seem to be more competent in handling the balance between societies’ needs for clinical training and patient needs for a favorable service experience. Practice implications: For-profits hospitals should revisit their business model once they get involved in the provision of public values such as education.

This study compares nonprofit, government, and forprofit hospitals in South Florida. Property rights arrangement is defined as rights to residual profits in the forprofit hospitals, and the tax-exemption status on the part of nonprofit and government hospitals with obligations to serve charitable purposes in the public interest. This dissertation derives and tests implications about differences in behavior in the context of efficiency, equity, and quality of care delivered in nonprofit, government, and forprofit hospitals. Fifty-six hospitals with Joint Commission on Accreditation of Hospitals (JCAH) accreditation were compared on institutional variables (bed size, location>; efficiency variables (occupancy rates, ancillary expenses, bad debts, manhours per patient day, salaries per FTE, length of stay/DRG, charges/DRG, reimbursement/ORB (on twenty DRGs); equity variables (Medicare days, Medicaid days, and uncompensated care); and finally, the quality variable (death rates/DRS on twenty DRGs). The immediate effects of profit maximization is considered as an incentive for managers in the forprofit hospitals. The social obligations attached to the tax-exemption status can be argued as the underlying rationale far output maximization, i. e. maximizing benefits to society by serving more patients in the nonprofit and government hospitals. Using analysis of variance, nonprofit, government, and forprofit hospitals were compared to determine if statistically significant differences were present at the .05 level of significance. Pairs of hospital types were tested for significant differences using ANOVA, Mann-Whitney, and multiple regression analysis. The results provided mixed support for the property rights theory. Significant differences were found on institutional variables, bed size and location; efficiency variables, bad debts, manhours per patient day, and charges per DRG; equity variables Medicare days, Medicaid days, and uncompensated care. In terms of the quality variable, the death rates per DRG showed no statistical significance. Unexpectedly, nonprofit hospitals were very similar to forprofit hospitals on the variables bad debts and Medicaid days. The relevance of this finding to health policy issues today, particularly tax-exemption privileges, warrant a suggestion for further evaluation of the performance of the nonprofit sector.

Purpose: This study examined whether nonprofit hospitals reflect social roles as well as values and satisfy their financial responsibilities compared with for-profit hospitals. Design/methodology/approach: Using panel data from the Hospital Financial and Utilization Information Data System in Florida from 2011 to 2017, this study employed a cross-sectional time-series analysis to examine the effect of hospital ownership on uncompensated care, charity care, technical efficiency, and profit margin. Findings: Compared to for-profit hospitals, nonprofit hospitals better fulfill a social role and provide more public value by providing more uncompensated care and charity care. For-profit hospitals, however, are financially more efficient than nonprofit hospitals in terms of maximizing profit margins. When comparing hospital technical efficiency, there is no statistically significant difference between nonprofit and for-profit hospitals. As expected, nonprofit hospitals better fulfill social roles but for-profit hospitals better perform financially. Research limitations/implications: This study revealed differences in fulfilling social roles and satisfying financial responsibilities between nonprofit and for-profit hospitals. To have a longer sustainability, as the provision of health care services includes both social and financial aspects, hospitals should emphasize not just either social or financial aspect only but both aspects at the same time. Future studies should extend this research to examine the conditions of normative-oriented commitments and motivations to see how they affect various hospital identity and role in different contexts. Also, as this study employed only one state in the U.S., it is important to carefully generalize findings in this study. Originality/value: This study proposes a theory surrounding the role and function of nonprofit organizations based on a dual bottom approach, reflecting the dimensions of nonprofits characteristics and identity.

Nonprofit, for-profit, and government hospitals are all more likely to offer services when they are relatively profitable than when they are relatively unprofitable. However, for-profit hospitals are considerably more likely than others to provide services based on profitability. After hospital and market characteristics are adjusted for, nonprofit hospitals offer relatively unprofitable services more than for-profit hospitals and less than government hospitals. Profitable services typically exhibit the opposite pattern. For-profit hospitals are also more likely to adopt or discontinue services consistent with changes in service profitability than are nonprofits, which in turn are more likely to do so than government hospitals. These results are similar to those we found before passage of the Affordable Care Act, when many more patients were uninsured. Policy makers and researchers tend to focus on whether nonprofit hospitals provide sufficient free care to justify tax benefits, thereby overlooking the significance of ownership for service provision, which likely has critical health and spending consequences.

Nonprofit hospitals have been criticized for behaving like for-profit hospitals. One prominent defense of nonprofit hospitals is contract failure theory, which suggests that nonprofits are important in markets defined by information asymmetries. Unlike for-profits, nonprofit hospitals' inability to distribute profits may provide patients with an important assurance that they will not be exploited in the course of receiving care. We investigated support for this theory using a sample of 2569 US adults. We assessed (1) relevance of hospital ownership status; (2) respondent preferences for nonprofit, for-profit, or public hospitals; and (3) respondent ability to correctly identify hospital ownership status. We found little evidence that hospital nonprofit status influenced Americans' decisions about where to seek care. Ownership status was relevant for fewer than 30% of respondents and preference was greatest overall for public hospitals. Only 30-45% of respondents could correctly identify the ownership status of nationally recognized hospitals, and fewer than 30% could identify their local hospitals. These findings suggest that contract failure does not currently provide a justification of nonprofit hospitals' value; further scrutiny of tax exemption for nonprofit hospitals is warranted.

In fiscal year 1990, administration accounted for 24.8 percent of total hospital costs in the United States - nearly twice the share in Canada. Studies from the 1970s and early 1980s found high costs, especially for administration, at for-profit hospitals. We calculated administrative costs for 6227 nonfederal hospitals and the total costs of inpatient care for 5201 acute care hospitals in the United States for fiscal year 1994 on the basis of data the hospitals submitted to Medicare. We analyzed similar data for fiscal year 1990. Using multivariate analysis, we assessed the effect of hospital ownership (private not-for-profit, for-profit, and public) on administrative costs, controlling for hospital type, census region, hospital size, and the proportion of revenues derived from outpatient services. We adjusted inpatient costs for local wage levels, hospitals' reporting periods, and case mix. Administrative costs accounted for an average of 26.0 percent of total hospital costs in fiscal year 1994, up 1.2 percentage points from 1990. They increased by 2.2 percentage points, to 34.0 percent, for for-profit hospitals; by 1.2 percentage points, to 24.5 percent, for private not-for-profit hospitals; and by 0.6 percentage point, to 22.9 percent, for public hospitals. In 1994, administration accounted for 37.5 percent of total costs at psychiatric hospitals (44.4 percent at for-profit hospitals) and 33.0 percent of total costs at rehabilitation hospitals (37.7 percent at for-profit hospitals). In a multivariate analysis, for-profit ownership was associated with a 7.9 percent absolute (34 percent relative) increase in the proportion of hospital spending devoted to administration as compared with public hospitals and a 5.7 percent absolute (23 percent relative) increase as compared with private not-for-profit hospitals. Among acute care hospitals, for-profit institutions had higher adjusted costs per discharge ($8,115) than did private not-for-profit ($7,490) or public ($6,507) hospitals. Much of the difference was due to higher administrative costs ($2,289, $1,809, and $1,432 per discharge, respectively). Administrative costs as a percentage of total hospital costs increased in the United States between 1990 and 1994 and were particularly high at for-profit hospitals. Overall costs of care were also higher at for-profit hospitals.

The different tax treatment of government, nonprofit, and for-profit hospitals implies different charity care obligations, with the greatest obligation for government hospitals and the least for for-profit hospitals. Prior research has not examined charity care provision among all three ownership types at the national level. Using 2018 Medicare Hospital Cost Reports, we compared charity care provision across 1,024 government, 2,709 nonprofit, and 930 for-profit hospitals. In aggregate, nonprofit hospitals spent $2.3 of every $100 in total expenses incurred on charity care, which was less than government ($4.1) or for-profit ($3.8) hospitals. No hospital ownership type outperformed the other two types with respect to charity care provision in a majority of hospital service areas containing all three types. Using different kinds of analyses, we also found wide variation in charity care provision within ownership types and a lack of a consistent pattern across ownership types. These results suggest that many government and nonprofit hospitals' charity care provision was not aligned with their charity care obligations arising from their favorable tax treatment. Policy makers may consider initiatives to enhance hospitals' charity care provision, particularly hospitals with government and nonprofit ownership.

The authors analyzed the differences in operational and financial performance between 42 matched pairs of for-profit psychiatric hospitals belonging to multifacility organizations and nonprofit psychiatric hospitals for the fiscal years ending in 1986 through 1990. The pairs of short-term hospitals were matched according to location, standard metropolitan statistical area, or wage index. Analyses were based on data on these hospitals from the Health Care Financing Administration. The groups of variables studied included the hospitals' operational performance and productivity, profitability and payer mix, revenue and expenses, and capital structure. Differences in the mean values of the variables for the for-profit hospitals and the nonprofit hospitals were analyzed by pairwise t tests. The for-profit organization hospitals had significantly higher net revenue, lower salary expenses, and higher profits than the nonprofit hospitals. Patients in the for-profit hospitals had longer stays, and these hospitals had fewer full-time employees per adjusted inpatient day and per adjusted discharge. The higher prices and operating margins of the for-profit hospitals belonging to investor-owned systems reflect the profit-maximizing goal of these facilities. The ability of for-profit organization hospitals to achieve economies of scale in expenses, however, was not evident except in the case of salary expenses.

Characteristics and patterns of elective admissions to for-profit and not-for-profit hospitals in France in 2009 and 2010

In the 2023 National Resident Matching Program (NRMP) match, there were 554 unfilled emergency medicine (EM) positions before the Supplemental Offer and Acceptance Program (SOAP). We sought to describe features of EM programs that participated in the match and the association between select program characteristics and unfilled positions. The primary outcome measures included the proportion of positions filled in relation to state and population density, hospital ownership type, and physician employment model. Secondary outcome measures included comparing program-specific attributes between filled and unfilled programs, including original accreditation type, year of original accreditation, the total number of approved training positions, length of training, urban-rural designation, hospital size by number of beds, resident-to-bed ratio, and the percentage of disproportionate share patients seen. The NRMP Match had 276 unique participating EM programs with 554 unfilled positions. Six states offered 52% of the total NRMP positions available. Five states were associated with two-thirds of the unfilled positions. Public hospitals had a statistically significant higher match rate (88%) when compared to non-profit and for-profit hospitals, which had match rates of 80% and 75%, respectively (P < 0.001). Programs with faculty employed by a health system had the highest match rate of 87%, followed by clinician partnerships at 79% and private equity groups at 68% (P < 0.001 overall and between all subgroups). The 2023 match in EM saw increased rates in the number of residency positions and programs that did not fill before the SOAP. Public hospitals had higher match rates than for-profit or non-profit hospitals. Residency programs that employed academic faculty through the hospital or health system were associated with higher match rates.

This study investigates how board size and occupational background of directors differentially influence social performance in for-profit and non-profit organizations. Using data from California hospitals, we develop a quantitative measure of social performance and provide the following empirical evidence. First, board size is negatively (positively) associated with social performance in for-profit (non-profit) hospitals. Second, the presence of government officials on the board is negatively (positively) related to social performance in for-profit (non-profit) hospitals. Third, representation of physicians on the board is positively associated with social performance in for-profit hospitals, whereas their presence is not significantly related to social performance in non-profit hospitals. Our findings highlight the different effects of governance mechanisms on social performance in for-profit and non-profit organizations.

Association Between Hospital Ownership Type and ST-Segment Elevation Myocardial Infarction Outcomes: Insights from the National Readmission Database, 2016-2022.