Congress should take action to require that all hospitals become non-profit organizations. If this were to occur, hospitals would still be able to make beyond the necessary reimbursements for their workers and procedures but the superfluous amount would be reinvested back into the health care system. Some examples of investments are developing research, opening new clinics, charity care, providing education to employees, and health promotion activities. Some would argue to make hospitals for-profit in order to promote competition and direct the system towards a free market. This idea is unreasonable due to the effects of cost and the needs of society. The government realizes that a free market system will not prevail and provides incentives for hospitals to convert to non-profit such as tax-exemption and discounts off property tax (1). According to the Illinois Business Law Journal, tax-exempt hospitals can't sell stock nor have shareholders. As of 2006, 85% of all hospitals were non-profit but the remaining for-profit hospitals consume a larger portion of the total health care expenditure per hospital (2). In 2001 for-profit hospitals received $6 billion of the $37 billion expenditure. Not only are they spending more but they also charge more. Investor owned hospitals charge 19% more than non-profit according to the Canadian Medical Association Journal which contracted U.S. data on profitable hospitals (4).
With a conversion to non-profit, the money benefitted will play a significant role within its community's health. Reinvested money goes towards charity care for the poor and other members of the community. Not only will the community receive better access they will also benefit in quality when the conversion gives a greater emphasis on certain employees. A common belief of non-profit hospitals is that their employees have lower wages than those of for-profit. Due to the 2003 National Compensation Survey, the average hourly salaries of for-profit and non-profit hospitals are compared. This survey shows that all profit employees make an average hourly salary less than non-profit hospital employees. There is a larger gap between full-time wages than part time wages, $0.99 to $0.27 respectively (5). Gaps are also present in the quantity of some medical professionals. Profitable hospitals have a significant amount of money contributing to administration and paperwork, 34% of costs compared to 24.5% in non-profit. On the other hand, non-profits have a comparable difference with a higher concentration of costs going to nurses and clinicians, 7% more of non-profit payroll than for-profit payroll. Placing a higher emphasis on more nurses and physicians can increase access and quality to anyone within the health care system. When investor owned hospitals contribute more money to administration the system loses the necessary focus on patient care and is rather placed on the process. This contribution to administration can decrease quality and access to patients seeking nursing and physician care. This study also recognizes that non-profit hospitals are usually larger by the number of employees than a majority of the for-profit hospitals. Out of the hospitals studied, 13% of the for-profit employed over 2,500 employees compared to 28% of the non-profit hospitals (4).
According to the New England Journal of Medicine another aspect of cost is the money spent on Medicare. A study was performed to compare for-profit, mixed, and not-for-profit hospitals and how much they spend on Medicare per capita. The study shows that each year not-for-profit hospitals spend less than for-profit and mixed hospitals on Medicare per capita in stable hospital service areas. It also shows that Medicare spending has increased dramatically since 1989 but the non-profit sector accounted for the least amount. Another portion of the study shows that after hospitals converted from non-profit to for-profit, Medicare spending increased. And vice versa, when for-profit converted to non-profit they spent less on Medicare after the transition (3).
Transitioning for-profit hospitals to non-for-profit will affect cost, quality, and access. Costs of the total health care expenditure will decrease by over $6 billion and 19% per person. Community members and the poor will also be able to access more charity care due to non-profit hospital investments. These contributions will ultimately allow the community to grow in population, in better health, and longer lives. Politicians may think that there are other proposals that would be more successful such as creating access to the health care system for every citizen. This proposal to convert every hospital to non-profit will help the system triangularly, it will increase access to care, decrease costs, and improve quality.
1. Congressional Budget Office. Nonprofit Hospitals and the Provision of Community Benefits. CBO.gov, December 2006. Web. 13 March, 2010. http://www.cbo.gov/ftpdocs/76xx/doc7695/12-06-Nonprofit.pdf
2. Illinios Business Law Journal. Non-Profit Hospitals' Tax-Exempt Status Under Fire From IRS, Local Governments. 20 October, 2006. Web. 13 March, 2010. http://iblsjournal.typepad.com/illinois_business_law_soc/2006/10/nonprofit_hospi.html
3. New England Journal of Medicine. The Association between For-Profit Hospital Ownership and Increased Medicare Spending. 5 August, 1999. Web. 13 March, 2010. http://content.nejm.org/cgi/content/full/341/6/420#T2
4. Physician's for a National Health Program. For-Profit Hospitals are Costlier Than Non-Profits. 7 June, 2004. Web. 13 March, 2010. http://www.pnhp.org/news/2004/june/forprofit_hospitals.php
5. Shahpoori, Karen P. and James Smith. United States Department of Labor-Bureau of Labor Statistics. Wages in Profit and Nonprofit Hospitals and Universities. 29 June, 2005. Web. 13 March, 2010. http://www.bls.gov/opub/cwc/cm20050624ar01p1.htm
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In my opinion forcing all hospitals to be non-profit may not be the right answer. For every for profit hospital that sacrifices patient care for profits you will find a non-profit hospital that is forced to shut down because it has not managed its money properly. In any hospital there has to be a balance between providing quality care and managing resources, and that just can not be mandated by polititians or voters.
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