Columbia/HCA and the Resurgence of the for-Profit Hospital Business
New England Journal of Medicine. 1996 Aug 1; 335(5): 362-367.
This two-part article addresses the medical, ethical, and public-policy issues posed by the resurgence of for-profit chains and their acquisition of nonprofit community hospitals. The prime case in point is Columbia/HCA Healthcare Corporation, the largest and most aggressive of the for-profit chains, the product of three large and several smaller mergers....There are four broad explanations for the surprising profitability of the proprietary chains. First, the chains, as claimed, are generally more cost-conscious than voluntary and public hospitals, which have goals outside the market. Second, in their business strategy, for-profits tend to avoid unprofitable services and unprofitable patients, displacing these costs onto the rest of the health care system. Third, for-profits sometimes "re-engineer" or downgrade their staffing, administration, and supplies. Finally, large for-profit chains offer financial incentives for doctors to use their hospitals, even though competing hospitals may actually have lower costs and charges.
Accountability; Advertising; Biomedical Research; Business Ethics; Comparative Studies; Deception; Doctors; Economics; Education; Entrepreneurship; Ethics; Goals; Health; Health Care; Health Care Delivery; Health Facilities; Historical Aspects; Hospitals; Incentives; Institutional Policies; Legal Aspects; Managed Care Programs; Managed Care; Organization and Administration; Patients; Physician Self-Referral; Physicians; Proprietary Health Facilities; Proprietary Hospitals; Public Hospitals; Research; Selection for Treatment; Social Impact; Statistics; Trends;
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Kuttner, Robert (1996-08-08)In the near future, we will see either a growing convergence in the behavior of nonprofits and for-profits or a sharper delineation between institutions with a community purpose and those driven by the bottom line. ...