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New England Journal of Medicine Editorial Says Evidence Against For-Profit Hospitals Now Conclusive

August, 1999

For-Profit Hospitals Deliver Inferior Care at Inflated Prices and Cost Medicare an Extra $5.2 Billion Annually

An editorial and study in today's New England Journal of Medicine (NEJM) concludes that for-profit hospitals are more expensive than not-for-profit facilities. For-profit hospitals cost Medicare an additional $732 per enrollee, or an extra $5.2 billion, in 1995 alone ("The Association Between For-Profit Hospital Ownership and Increased Medicare Spending," NEJM, August 5, 1999). The editorial also notes that substantial prior research confirms that for-profit hospitals are 3 to 11 percent more expensive and spend more on overhead and administration while hiring fewer nurses, providing less charity care, and providing patients with fewer hospital days than not-for-profit facilities.

The editorial also concludes that for-profit hospitals are lower in quality than not for- profit facilities, based on a review of nearly two decades of peer-reviewed literature ("When Money is the Mission -The High Costs of Investor-Owned Care," NEJM, August 5, 1999). For example, two recent studies have found death rates 6 to 7 percent lower at private non-profit hospitals and 25 percent lower at teaching hospitals than at for-profit facilities. Other studies have found more post-operative complications and preventable adverse events at
for-profit facilities.

The editorial is authored by Harvard Medical School Associate Professors Steffie Woolhandler, MD and David U. Himmelstein, MD, co-authors of a July 14 study in the Journal of the American Medical Association showing that investor-owned HMOs are lower-quality than not-for-profits on every single one of 14 quality measures (Quality of Care in Investor-owned vs. Not-for-Profit HMOs). Dr. Himmelstein and Woolhandler are also co-founders of Physicians for a National Health Program.

The study on hospitals, performed by Dartmouth Medical School researchers Elaine Silverman, MD, MPH, Elliott Fisher, MD, MPH, and Jonathan Skinner, PhD finds substantially higher Medicare costs and more rapid price increases in communities dominated by for-profit hospitals. The authors may be reached at (802) 295-9363 x5545 (ES), (603) 550-1822 (EF), and (603) 646-2535 (JS).

According to an editorial in today's New England Journal of Medicine, for-profit hospitals provide lower quality care while charging higher prices than not-for profit facilities. The editorial, which accompanies a study on the impact of investor-ownership on Medicare costs, comes just three weeks after the publication of research showing that investor-owned HMOs scored lower on every single one of 14 quality measures and spent 48 percent more on overhead and profits than not-for-profit HMOs.

Like their cousins in the HMO industry , "investor-owned hospitals are profit maximizers, not cost minimizers. Strategies that bolster profitability, like Columbia HCA' s glitzy advertising, can worsen efficiency. The competitive free market described in textbooks doesn't and can't exist in health care," says Drs. Steffie Woolhander . "Seriously ill patients can't comparison shop or accurately judge quality, especially when for-profit HMOs and hospitals try to mislead consumers.

Co-author Dr. David Himmelstein notes that "for-profit medicine turns doctors and nurses into tools of Wall Street and patients into commodities . . . Our society recognizes that some things are too intimate or corruptible to trust to the market. We prohibit selling children and buying juries. Investors should not profit from suffering. For-profit hospitals and HMOs should be banned."

"The editorial and study conclusively demonstrate -if there was any doubt left -- that marketplace medicine is a failed experiment," says Dr. Quentin Young, National Coordinator, Physicians for a National Health Program and an internist in Chicago. "We have 45 million people without any insurance and 125,000 additional people losing their insurance every month. Every day there's more bad news about how rotten our health system is -prices rising, quality falling, and, just this month, an additional 250,000 seniors being dumped from Medicare HMOs."

"The so-called "Patient Bill of Rights" defeated last month was so threadbare it didn't even include the right to health care" continues Dr. Young. "The good news is, there's an obvious solution to this chaos, and one we must study hard a single payer not-for-profit national health program like they have in Canada (our much poorer neighbor to the north) or Scandinavia {where doctors still make house calls). The American people rate "insuring everyone" their top health care priority (CBS poll, July, 1999). In the 2000 Presidential elections, let's ensure that at least one candidate will have the courage to insist that health care be a human right and refuse to accept any campaign funding from for-profit HMOs, hospitals, physicians' groups, nursing homes and drug companies. If that candidate emerges, he or she will be our next President."