Profits, Quality, and U.S. Hospitals

The recent articles in the New York Times about the Hospital Corporation of America (HCA) have once again raised important questions about the role of for-profit hospitals in the U.S. healthcare system.  For-profits make up about 20% of all hospitals and many of them are part of large chains (such as HCA). Critics of for-profit hospitals have argued that these institutions sacrifice good patient care in their search for better financial returns.  Supporters argue that there is little evidence that their behavior differs substantially from non-profit institutions or that their care is meaningfully worse.

To me, this is essentially an empirical question. Yet, I read the through the articles, I was struck by the dearth of data provided on the quality of care at these hospitals.  Based on the comments that followed the stories, it was clear that many readers came away thinking that these hospitals had sacrificed quality in order to maximize profits.  Here, I thought an ounce of evidence might be helpful.

Measuring quality:

There is no perfect way to measure the quality of a hospital.  However, the science of quality measurement has made huge progress over the past decade.  There is increasing consensus around a set of metrics, many of which are now publicly reported by the government and even are part of pay-for-performance schemes.  While one can criticize every one of these metrics as imperfect, taken together, they paint a relatively good, broad picture of the quality of care in an institution.  We focused on five metrics with widespread acceptance:

  1. Patient experience (as measured by HCAHPS, the national metric for grading hospitals)
  2. Process quality (whether hospitals are adherent to evidence-based guidelines)
  3. Mortality rates (Proportion of people who die within 30 days of hospitalization, taking into account the “sickness” of the patient)
  4. Readmission rates (Proportion of people who are readmitted within 30 days of discharge, taking into account the “sickness” of the patient)
  5. Hospital Safety Score (a measure of how effective a hospital likely is at preventing medically-induced harm to patients).

An important caveat: The NY Times article highlighted terrible, unethical practices by some physicians at HCA hospitals who appear to put in cardiac stents when there was no clinical indication.  We don’t have the data to examine whether this practice occurs more often at HCA hospitals than at other institutions. Therefore, I’ve decided to focus more broadly at hospital quality.  Most of the metrics above have been approved by the National Quality Forum, are widely regarded by “experts” as being good, and are used by Medicare to judge and pay for quality.

How we analyzed the data:

We examined all U.S. hospitals in four groups:  Privately-owned non-profit hospitals, government-owned public hospitals, for-profit hospitals that were not part of the HCA chain, and HCA hospitals.  In our analysis we “adjusted” for characteristics that are beyond the hospital’s control such as size, teaching status, urban versus rural location, and region of the country (adjusting is important:  imagine that all the for-profit hospitals were large and large hospitals generally had better quality.  Without adjustment, we’d say for-profit hospitals were better and therefore, we should encourage more for-profit hospitals.  With adjustment, we’d be able to hold size differences constant and examine the actual relationship between quality and the profit status of the hospital).

What we found:

In the table below, we use “non-profit” hospitals as the reference group because it’s the largest group of hospitals.  All the scores that are statistically different (at p-value <0.05) are highlighted either in red if they are significantly worse or in green if they are significantly better.


The best part of looking at data is you get to draw your own conclusions.  Here are mine. Public hospitals are struggling on nearly every metric. For-profit hospitals outside of the HCA are a mixed bag – they do worse on patient experience (as we’ve found before), better on processes measures, and somewhat worse on mortality and readmission rates.  They are about average on the Leapfrog safety score.

However, HCA hospitals look pretty good. They tend to have good patient experience scores, really excellent process quality (adherence to guidelines) and are average or above average on mortality and readmissions (pneumonia mortality does appear to be high, though not statistically significant). They do very well on the Leapfrog safety score* (nearly half got an “A”).

My takeaway is that although which hospital you go to has a profound impact on whether you live or die, whether the hospital is “for-profit” or “not for profit” has very little to do with it.  What really matters is leadership, focus on quality, and a dedication to improvement.  That appears to happen equally well (or badly, depending on your perspective) in both for-profit and non-profit hospitals.

So, when it comes to quality, it’s time to stop thinking about it as an issue of “for-profit versus non-profit” hospitals.  Instead, it’s time to start talking about the large number of relatively poor performing hospitals where patients are being hurt or killed un-necessarily.  Those hospitals come in all sizes, shapes, and yes, ownership structures, and we have to figure out how to make them better.

Finally, these analyses were run by Sidney T. Le, a terrific young analyst in our group.  You should follow him on twitter (@sidtle) although his love of Stanford sports can be a challenge. Consider yourself warned.

*The Leapfrog safety score was developed by a group of experts (full disclosure:  I was on that panel – but don’t worry, there were many people much smarter than me on the panel).

Ashish Jha, MD, MPH is the C. Boyden Gray Associate Professor of Health Policy and Management at the Harvard School of Public Health. He blogs at An Ounce of Evidence where this post first appeared.

8 replies »

  1. The same caveats, along with negociated fee schedules, apply to P4P programs for docs but nobody bothers about them.

  2. I’d like to hear the author’s response to these concerns. If you haven’t adjusted for SES and payer mix in hospital location, these comparisons aren’t helpful…

  3. This blog has detailed a phenomenal idea about the qualitative aspects of hospitals of USA that is very productive for me to learn and understand about the operational modes of the hospital of this country.

  4. Amen. Ever notice that the new surgicenters and boutique hospitals have lots of fountains and flat screen TVs, but no indigent or poor patients hanging around? Our local Ortho boutique hospital has a 24 hour gourmet chef on call for patients.


  5. Let’s make 2 major adjustments.

    1) location–HCA hospitals are in nice suburbs, public hospitals are not. This study may have adjusted for some of that but it’s hard to imagine that all the issues associated with living in a poorer areas have been mitigated. In fact it’s staggering that average for-profits without HCA have HIGHER readmit rates than public hospitals –assuming readmit rates are a process issue, which I assume CMS does 🙂

    2) Costs–in general for-profit hospitals have been 20% more expensive than “non-profits” for years. So on a value for money-spent per outcome improvement basis some of the “success” HCA shows is likely to be mitigated

    Finally, lets remember that most non-profits act just like for-profits (Accretive Health taking credit cards off people in recovery rooms in Minnesota? Sutter being the most expensive hospital chain in N. California and sticking it to insurers)> So bad as HCA may or may not be, they’re not that far ahead or behind the peleton