Policy Documents

NonProfit To For-Profit Conversions By Hospitals and Health Plans A Review. Part 1

Jack Needleman –
February 1, 1999

In this review, authored by Jack Needleman, the nationwide debate that has for the past several years, extensively focused upon the number of hospitals and health plans converting from nonprofit to for-profit status.  The increased interest in conversions is based in large part, upon the perceptions that the numbers are largely growing, particularly in states such as Massachusetts where for-profit hospitals are historically unprecedented and non-existent.

While the reasons for hospitals and health plans converting from nonprofit to for-profit may vary, a common denominator among both is the financial and market pressures.  The assurance that fair value of the transferred assets are retained and/or returned to the community, is also a key issue in the debate as the studies are beginning to be reported by the hospitals converting, any changes made towards uncompensated care which may affect charitable organizations as well as historic community roles and need to be defined more explicitly.  There are concerns over the threat affecting community benefits such as Medicaid, unprofitable services which include emergency and trauma care, teaching and/or education programs and maintaining a quality of service as well as, fair dealing among patients and consumers.