Hospital Ownership Conversions

What is the impact of hospital ownership changes on strategic and clinical outcomes? Using the Lewin database (approximately 600 conversions), particularly those for which there is complete transaction information (approximately 350), supplemented with data from the Medicare Cost Reports, Medicare Provider of Service Files, American Hospital Association Annual Survey of Hospitals, IRS Sources of Income, and the Area Resource File, researchers from Duke University examined: 1) why some hospitals choose to convert to for-profit status and why they select a particular type of ownership change; 2) in what percentage of cases a "fair" price is paid by the acquiring organization; and 3) how conversions affect the hospitals’ internal decision-making process. They also obtained some information by telephone from hospitals and other parties familiar with the transactions. Finally, they analyzed how strategic business decisions and clinical decisions are affected by will conducting 20 case studies of converted hospitals, comparing the information collected with similar information from 20 matched control hospitals. The investigators hypothesized that organizational goals vary by ownership and differences in goals are reflected in differences in decision-making processes and outcomes. In addition, they posited that conversion increases uncertainty, which, in turn, may reduce the effectiveness of staff and put the hospitals at risk for poor outcomes. The objective of the study was to provide policymakers and regulators with additional information about where oversight and/or intervention with respect to hospital conversions might be desirable.