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For-profit hospitals cost Medicare more, study says
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8-16-99 Hanover, N.H. For-profit hospitals charge significantly more to treat Medicare patients than nonprofit hospitals, according to a controversial new study published in the New England Journal of Medicine. Researchers at Dartmouth University used data from 1989, 1992, and 1995 to conclude that a nationwide movement to convert not-for-profit hospitals to for-profit status needs to be examined more closely, said Elliott S. Fisher, MD, co-author of the report. The study, called "The Association Between For-Profit Hospitals and Increased Medicare Spending," argues that the rates of per capita Medicare spending, as well as increases in spending rates, were greater in areas served by for-profit hospitals in the three years sampled. The study found that for-profit regions charged $732 more per enrollee than nonprofit areas in 1995, resulting in a $5.2 billion differential between the markets. And in the 33 areas where not-for-profit hospitals converted to for-profit ownership, spending rates grew 50 percent faster in the newly for-profit areas. "I personally have no doubt that there are some for-profit hospitals that are very cost-effective," said Fisher, a professor at the Dartmouth Medical School. "But on average, we found that for-profit hospitals cost the Medicare program more. We have to find out why. Do they do more to the patients that they serve? Do you have lower costs and higher quality? I would be encouraging legislators to think carefully before they make the decision to convert a not-for-profit hospital." Christine Burch, executive director of the National Association of Public Hospitals and Health Systems, said the study raises questions about government oversight in general. "The government's role should be a watchdog for all providers, including for-profit hospitals. Health care frequently gets expensive, and if [for-profit regions] are spending inappropriately, then the government should look into it," she said. The study has drawn heated criticism from for-profit hospital advocates, who charge that the data used in the study failed to control for important regional differences and patient data. Tom Scully, president and CEO of the Federation of American Health Systems, which represents nearly 1,700 for-profit hospitals, blasted the New England Journal of Medicine's report and an accompanying editorial as biased and called the findings "weak and inconclusive." "The statistical merit of this piece is highly suspect," Scully said. "[The journal's] editorial bias is incredibly transparent."
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