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BOTH NONPROFIT HEALTH CARE PROVIDERS AND HEALTH PLANS The Value of Nonprofit Health Care This Alliance report briefly describes the history and size of the nonprofit health care sector, its role and differentiation from the governmental and for-profit health care sectors, its relative performance along various dimensions according to the research literature, and challenges looking ahead. Nonprofit Health Care and Universal Health Care Coverage This Alliance report presents the proceedings of an October 1, 2007 roundtable discussion co-sponsored with the health care journal Inquiry on the role of nonprofit health care organizations in promoting, and operating under, universal health care coverage. The panelists for this discussion were: Terry Andrus, President and CEO of the East Alabama Medical Center, Opelika, Alabama; William Cox, President and CEO of the Alliance of Catholic Health Care, Sacramento, California; Bradford Gray, Ph.D., Principal Research Associate of the Urban Institute, Washington, DC and Editor of the Milbank Quarterly; Cleve Killingsworth, President and CEO of Blue Cross Blue Shield of Massachusetts, Boston, Massachusetts; and Paula Steiner, Senior Vice President of Marketing and Sales for Blue Cross Blue Shield of Illinois, Chicago, Illinois. Bruce McPherson, President and CEO of the Alliance, moderated the discussion. Ownership Status of the Twenty Health Care Organizations with the Largest Fraud Settlements This list published in Modern Healthcare in June 2007 indicates that over the last 20 years (between January 1986 and January 2006), 19 of the top 20 largest health care fraud settlements under the False Claims Act were for-profit (the exception being St. Barnabas Hospitals in New Jersey). Nonprofit Health Care: Making a Distinctive Contribution This four-page paper by the Alliance of Catholic Health Care, updated in June 2008, briefly describes the roots of the nonprofit sector in America, its essential character, its role in health care, changing structures within a constant mission, and sustaining the mission. Why Nonprofits Matter in American Medicine: A Policy Brief This 36-page paper, co-authored by Mark Schlesinger, Ph.D. and Brad Gray, Ph.D. and distributed at a June 20, 2005 Aspen Institute Luncheon Seminar in Washington, DC, is an excellent synopsis of research findings on the value and performance of the nonprofit health sector. In the policy brief they address key criticisms of the sector and conclude that "none of the charges are sustainable in their conventional form...". They note, however, that nonprofit medical care faces some very real and important challenges:
Four Views on Nonprofit Health Care Performance, Public Accountability and Tax Exemption This June 20, 2006 Health Affairs press release summarizes the views of researchers Brad Gray and Mark Schlesinger on this important topic, as well as the perspectives of Jill Horwitz, David Hyman & William Sage, and Gregg Bloche. The papers were published as a package on the same day on the Health Affairs website. Nonprofit Health Care Organizations and the Public Trust: A Roundtable Discussion This five-page Alliance report, a reprint of an article appearing in the Fall 2006 issue of the journal Inquiry, presents a roundtable discussion on the importance of public trust and its dimensions for nonprofit health care organizations, how they have been performing in this regard, whether there should be a higher or different standard for them, and what as individual organizations they can do, and and should avoid doing, to improve their trustworthiness. If Nonprofit Doesn't Mean "No Profit," How Much is Enough in Health Care? This is a reprint of an article in the Fall 2005 issue of the journal Inquiry. It is the second of a new feature called Dialogue, which is a collaboration with the Alliance for Advancing Nonprofit Health Care to conduct roundtable discussions on current, major issues as they arise in the nonprofit health sector. Public Expectations of Nonprofit and For-Profit Ownership in American Medicine From the November/December 2004 issue of Health Affairs: This article, by Mark Schlesinger, Brad Gray and Shannon Mitchell, summarizes findings of past surveys on public expectations regarding nonprofit and for-profit ownership of nonprofit health care organizations, as well as summarizes the results of their own telephone interview survey conducted in the summer of 2002 of 5,000 U.S. residents. The following were some of the findings from their own survey: about one-third had little or no understanding of ownership differences; most have a jaundiced view of all types of health plans and hospitals (except for fairness of treatment, regardless of race), but especially of health plans and most pronounced regarding trustworthiness; and yet, most believed that ownership does matter. Quality of care was viewed more positively in for-profits, more so in health plans than hospitals, while nonprofits were judged more trustworthy by a wide margin on three of four measures (discharging sick patients when insurance runs out, charging for services that patients don't really need, and overcharging for health insurance). Nonprofit health plans were viewed as being more humane (treats you like a number rather than as a person) by a wide margin, whereas most respondents expected both ownership types of hospitals to treat patients humanely. Of the 40 percent who believed that ownership did matter in terms of humane hospital treatment, however, most favored nonprofits. For those surveyed who understood the ownership difference (could define it, had completed college or worked in health care), they tended to see no differences in quality based on ownership but expected nonprofits to be more trustworthy (most markedly with respect to lack of financially motivated discharges). Among both those who understood and those who didn't understand the ownership difference, more than half felt that ownership did not matter with respect to humane treatment, although the minority perceiving an ownership difference in this area favored nonprofits. Not-For-Profit Advocate Calls for Managerial Rigor From Managed Care magazine, February 2004. In this Q and A article Howard Berman, Board Chair of the newly formed Alliance for Advancing Nonprofit Health Care and recently retired as CEO of Lifetime Healthcare, the largest nonprofit health care organization in New York State, discusses the value of nonprofit health care as well as the challenges and opportunities ahead for the boards and managers of these organizations. For-profit Health Care Not Favored by Most People From Business First. December 4, 2003 Rochester-based Harris Interactive conducted this survey for The Wall Street Journal Online's Health Industry Edition. When Money Is the Mission: The High Costs of Investor-Owned Care Steffie Woolhandler, M.D., M.P.H. and David U. Himmelstein, M.D. Cambridge Hospital from: New England Journal of Medicine, Vol 341, No. 6 August 5, 1999 Refer to www.nejm.org (New England Journal of Medicine homepage) for more information on this article. NONPROFIT HEALTH CARE PROVIDERS Nonprofit Health Systems Score Higher in Quality and Patient Safety This May 16, 2008 article in HFMA News reports on the results of a study that found that of the more than 70 health systems studied, representing more than 1,500 hospitals, the nonprofits scored 7 percent higher on average on quality and patient satisfaction measures. Governance in High-Performing Community Health Systems: A Report on Trustee and CEO Views This report, issued in 2009, presents findings of a study by researchers at the University of Iowa led by Lawrence Prybil, Ph.D., that focuses on three important areas of health care governance: board structure and composition; board practices and processes; and board culture. These three areas are often cited as areas of governance that governing boards need to focus on if they are to achieve a strong and effective governing board. The study recommendations stress the board's role in establishing community benefit policy, creating a community benefit committee, assessing community, adopting a formal community benefit plan, ensuring that reporting and accountability mechanisms are in place, and providing a thorough report on the organization's community benefits to its community. Ownership Form and Consumer Welfare: Evidence from the Nursing Home Industry This nineteen-page article by Rexford Santerre and John Vernon, published in the Winter 2007/2008 issue of Inquiry (44:381-399), compares the likely consumer benefits of higher quality with the potentially greater production costs that result from increased nonprofit activity in a nursing home services market. Their empirical results indicate that nonprofit nursing homes are under-represented in many market areas from a consumer welfare perspective. CBO Report on Nonprofit Hospitals and the Provision of Community Benefits In December 2006 the CBO released this report, which presented the results of a study of hospitals in five states (California, Florida, Georgia, Indiana and Texas) comparing their provision of uncompensated care, services to Medicaid patients and provision of certain specialized services generally regarded as unprofitable. The results were generally mixed. For instance, nonprofit hospitals on average provided more uncompensated care than for-profit hospitals, but individual hospital results varied widely. Nonprofit hospitals were found to have adjusted Medicaid shares lower on average than for-profits, but were more likely to provide each of the four specialized services examined (intensive care for burn patients, ERs, high-level trauma care, and labor and delivery services). IRS Interim Report on its Hospital Compliance Project In this 62-page report released in July 2007, the IRS presented the preliminary results of its compliance survey initiated in 2006 of 487 nonprofit hospitals. One of the major interim findings is that over 50% of total community benefit expenditures reported were for uncompensated care, with significant variations in how hospitals report uncompensated care and payment shortfalls from government programs. Medical education, research and community programs accounted respectively for about 23%, 15% and 6% of total community benefit expenditures reported. The report also notes that the average community benefit expenditures as a percentage of the individual hospital's total revenues was 9%, and the median 5%, but that the expenditures reported do not necessarily reflect all aspects of community benefit that might have been provided by the respondents. Minnesota Hospitals: Uncompensated Care, Community Benefits, and the Value of Tax Exemptions This 50+ page report issued in January 2007 by the Minnesota Department of Health, as legislated required, found that in 2005 the private nonprofit hospitals in the state provided $535.3 million in total community benefits (about 6.4 % of their operating costs), far exceeding the estimated total value of their tax exemptions ($443.6 million). Alliance Comments on the Independent Sector Nonprofit Panel's Proposed Principles for Self-Regulation This document contains the Alliance's comments and recommendations on the proposed principles. Overall, the Alliance was pleased with and supportive of almost all of the proposed principles, which are consistent with those set forth in the Alliance's own guidelines on governance practices for nonprofit health care organizations, adopted by the Alliance Board in May 2005 and subsequently shared with the Nonprofit Panel. The Alliance recommended some additional principles from our governance guidelines as well as some refinements in several of the Panel's principles. All 29 proposed principles are appended for ease of reference. Making Profits and Providing Care: Comparing Nonprofit, For-profit, and Government Hospitals This 2005 article in Health Affairs (Volume 24, Issue 3) by Jill R. Horwitz reports on the results of her study using 1988-2000 AHA hospital data, which found that investor-owned hospitals are most likely to offer profitable services and are also most responsive (entering or exiting the market) to changes in service profitability than the other two ownership types. U.S. For-Profit Hospitals Cost More - Canadian Study This June 7, 2004 article by Reuters correspondent Maggie Fox, reports on a study just published by Canadian researchers in the Canadian Medical Association Journal who found that U.S. investor-owned hospitals are less cost-efficient (by nearly 20%) than their nonprofit counterparts. A Systematic Review and Meta-analysis of Studies Comparing Mortality Rates of Private For-profit and Private Not-for-profit Hospitals Reprinted from:, by permission of the publisher, CMAJ 20 May 2002; 166 (11) pp 1399-1406 © 2002 Canadian Medical Association *The Canadian Medical Association (CMA) assumes no responsibility or liability for damages arising from any error or omission in the text or from the use of any information or advice contained in this material. Special Article: "The Association Between For-Profit Hospital Ownership and Increased Medicare Spending" by: Elaine M. Silverman, M.D., M.P.H., Jonathan S. Skinner, PhD, and Elliot S. Fisher, M.D., M.P.H. from: New England Journal of Medicine, Vol 341, No. 6 August 5, 1999. Refer to www.nejm.org (New England Journal of Medicine homepage) for more information on this article. Nonprofit Nursing Homes Provide Better Quality, Major Study Shows This August 20, 2009 article reports on the results of a major new statistical review by Canadian researchers of 82 individual research studies collecting data between 1965 and 2003 on the quality of nursing homes in the U.S. The researchers found “unequivocally”that nonprofit nursing homes provide higher quality care than for-proft nursing homes. GAO Report on the Methodology Used in CMS' Special Focus Facility Program In this August 2009 report, the GAO concludes, using CMS' ranking methodology on nursing home quality, that the most poorly performing nursing homes tended to be chain-affiliated and for-profit. Testing for Ownership Mix Efficiency: The Case of the Nursing Home Industry This February 2005 research report, by Rexford Santerre and John Vernon at the Center of Healthcare and Insurance Studies and Department of Finance of the University of Connecticut Business School, finds that efficiency--in terms of quality of care per dollar-- could be significantly improved by changing the ownership of nursing homes from for-profit to not-for-profit status. The authors note that over the 2,939 market areas they defined for this study, the average nonprofit market share of nursing homes is currently only 23 percent, with a median value of only 7 percent. The nonprofit market share is below 20 percent in nearly 61 per cent of these areas. The report can be purchased at papers.ssrn.com. Comparative Performance and Quality Among Nonprofit Nursing Facilities in Texas In this December 2006 article, published in Volume 5, Number 4 of Nonprofit and Voluntary Sector Quarterly, researchers from Texas A&M and Texas State Universities report on their analyses indicating that: (1) except for size, there are no significant differences in quality among various nonprofit categories of nursing facilities in Texas; and (2) government facilities were 13-16% more costly than private secular nonprofits in Texas, while religious-affiliated nonprofits were slightly less efficient (1-6%) than private secular nonprofits. NONPROFIT HEALTH PLANS Most Top-Quality HMOs Are Again Nonprofit This November 17, 2009 Alliance press release reports that most of the top-quality HMOs in the U.S., whether offering commercial, Medicare and/or Medicaid products, are nonprofit for the fifth straight year. This analysis is based on the latest NCQA quality rankings featured in the November 2009 issue of U.S. News & World Report. Most Top Member-Satisfying Health Plans Are Again Nonprofit This April 5, 2010 press release reports that most of the health plans in the U.S. rated #1 in member satisfaction in their regions, as well as most of the health plans with above-average member satisfaction ratings in their regions, are nonprofit or otherwise non-investor-owned. This analysis is based on the results of the most recent survey by J.D. Power and Associates. These findings are similar to the results of this firm's previous surveys. What's in the Stars? Quality Ratings of Medicare Advantage (MA) Plans This December 2009 issue brief by the Kaiser Family Foundation reports that, based on CMS quality scores for MA plans, those that are non-for-profit have significantly higher ratings. Hospitals View Nonprofit Blues More Favorably Than Largest For-Profit Health Insurers On March 7, 2008 Davies Public Affairs released the results of its second annual survey to assess what hospital executives think about the major private health insurers with whom they relate. Their report is available at http://www.daviespublicaffairs.com/healthcarenews.php. Seemingly lost in the shuffle of the report and press coverage, however, were the following findings:
This 2003 study by Treo Solutions, under commission by the Alliance for Advancing Nonprofit Health Care, found that nonprofit health plans in New York State (predominantly upstate) had lower premiums and operating margins and were more committed to safety net programs. Dispelling the Myth: Why Conversions of Blues Plans to For-profit Don't Make Economic Sense This 2004 report by Carl J. Schramm, PhD, under commission by the Alliance for Advancing Nonprofit Health Care, found based on 1997-2002 data that: (1) nonprofit Blues plans were financially healthy and could be expected to continue to be so; and (2) many of the intended or supposed efficiencies associated with conversations are hard to achieve and no economies of scale have been observed in integration of information-processing systems. Nonprofit Health Insurers: The Financial Story Wall Street Doesn't Tell This 2003 report by Susan R. Barrish, under commission by the Alliance for Advancing Nonprofit Health Care, found that nonprofit Blues plans had significantly lower operating margins yet were significantly healthier financially (higher risk-based capital ratios). Quality of Care in For-profit and Not-for-profit Health Plans Enrolling Medicare Beneficiaries This article by Eric Schneider, MD et al published in December 2005 in the American Journal of Medicine summarizes the results of a study presented at the Society for General Internal Medicine Conference in Vancouver, BC in 2003. These researchers found that even after adjusting for socio-demographic case-mix and health plan characteristics, quality of care was higher by a statistically significant degree in nonprofit health plans on three of four HEDIS measures studied (breast cancer screening, diabetic eye examination and follow-up after hospitalization). Differences in geographic location of for-profit and nonprofit plans did not explain these quality differences. There was no statistically significant difference found in application of beta-blocker medication after myocardial infarction. The Effects of HMO Ownership on Hospital Costs and Revenues This article, by researchers Shen and Melnick and published in the Fall 2004 issue of Inquiry, found that, conditional on overall HMO penetration level, hospitals in areas with high for-profit HMO penetration experienced revenue and cost growth rates that were 10 percentage points below hospitals in areas with low for-profit penetration areas; the difference was especially evident within high HMO penetration areas. The authors noted that they were not able to explore in their analysis whether the cost reduction affected patient care. A Broader Vision of Managed Care, Part 3: The Scope and Determinants of Community Benefits This article by researchers Mark Schlesinger, Brad Gray and Michael Gusmano in the May/June 2004 issue of Health Affairs reports on the results of their survey of a national sample of HMOs in 1999 indicating that the scope of community benefit activities was broader for HMOs that operate under nonprofit ownership, enroll Medicaid beneficiaries, are influenced by local business leaders, and are located in states with community benefit reporting laws. Measuring Community Benefits Provided by Nonprofit and For-Profit HMO's From Inquiry, The Journal of Health Care Organization, Provision and Financing. Vol. 40, No. 2, pp. 114-132; September 2003. Community Business: Why not-for-profit status for health plans is important By Andy Czajkowski and Mark W. Banks, M.D. from: Minnesota Physician, January 1999 Health Plan Characteristics And Consumers' Assessments Of Quality By Bruce E. Landon, Alan M. Zaslavsky, Nancy Dean Beaulieu, James A. Shaul, Paul D. Cleary from: Health Affairs, The Policy Journal of the Health Sphere. March/April 2001. Volume 20 No. 2 Many purchasers and consumers of health care have become concerned about the quality of care being delivered in managed care plans. Little is known, however, about the health plan characteristics that are associated with better performance. These researchers used survey responses from 82,583 Medicare beneficiaries from 182 health plans to study the association of consumers' assessments of care with health plan characteristics. For-profit and nationally affiliated health plans received much worse scores on the outcomes of interest, particularly for overall ratings of the health plan and composite measures of customer service and access to care. Health plans accredited by the National Committee for Quality Assurance did not receive higher scores. To order the article, click here. Study Finds that Medicare Patients Give Higher Overall Marks to Nonprofit than For-Profit Health Plans News Release: Harvard Medical School Office of Public Affairs. March 12, 2001 Blue Cross Conversion: Policy Considerations Arising From A Sale of the Maryland Plan by Carl J. Schramm, Baltimore, Maryland. November 2001 |
