Are for-profit hospital conversions harmful to patients and to Medicare?

Document Type

Conference Proceeding

Publication Date

1-1-2002

Abstract

We examine how changes in hospital ownership to and from for-profit status affect quality and Medicare payments per hospital stay. We hypothesize that hospitals converting to for-profit ownership boost postacquisition profitability by reducing dimensions of quality not readily observed by patients and by raising prices. We find that 1-2 years after conversion to for-profit status, mortality of patients, which is difficult for outsiders to monitor, increases while hospital profitability rises markedly and staffing decreases. Thereafter, the decline in quality is much lower. A similar decline in quality is not observed after hospitals switch from for-profit to government or private nonprofit status.

Identifier

0036762209 (Scopus)

Publication Title

RAND Journal of Economics

External Full Text Location

https://doi.org/10.2307/3087470

ISSN

07416261

PubMed ID

12585305

First Page

507

Last Page

523

Issue

3

Volume

33

Grant

R01AG009468

Fund Ref

National Institute on Aging

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