Summary of the “Bigger Piece of the Pie”

The number of all hospitals in the country is declining.  Since 1975, there was a 1/6 less on the total number of hospitals.  Investor owned facilities is currently on the rise.

From the year 1993 it started to spring high until 1997 and then there was an incremental decrease afterwards but it continues to rise up to the year 2003.  By the end of 2003, investor-owned hospital comprised 16% of the nation’s community hospitals.  Public hospitals are also diminishing in numbers as well as the not- for profits which decline more than 10 %.

It is a continued long term decline that was neutralized by the 2002 figure wherein there was a slight increment.  According to observers it will likely to remain stable in the next coning years or will decline slightly.  This can be explained by the infeasibility of small hospitals commented by the professor and director of the health policy and administrative division for the School of Public Health at the University of Illinois Chicago.  More patients prefer to go to large hospitals which were of their driving distance.  Conversion of not-for profit hospitals to for-profit hospital is also outpacing.

The biggest factors remains a access to capital-investor-owned chains have it, while access is much more varied for not for profit systems.  Many of the broad measures of credit quality, such as annual median figures for profitability and debt coverage but the prosperity is not uniform throughout the sector even if many are performing better.   Investor owned hospitals are squeezed with bad debt expense but they were able to attract equity and debt capital.  Private firms were attracted in order to recapitalize the companies.  Hospitals are also in mess regarding reimbursement of high commercial insurance companies.

Due to the high rates of the hospitals, the insurers were prompted to push for a double digit percentage increase premiums for employers.  Facing a fourth year of double-digit premium hikes, companies have been getting tough this year, pushing a lot more of those costs back onto their employees in the form of higher co-payments and other cost-sharing arrangements.

Recognizing the limitations of those tactics, the survey found employers looking to longer-term solutions and possible government intervention to head off the unrelenting increases.  If this continues, employers may drop coverage and push more of their costs to employees, thus making an even more bad debt for the hospitals.

However, if they decide to lower the premium increase, they would not be able to boost the reimbursements the way the hospitals are used to.  Meanwhile, the pressure is now building up for not for profit hospitals regarding charity care.  It is an emerging issue whether or not the not-for-profit hospitals exert pressure on for-profit hospitals to provide charity care and whether for-profit hospitals react differently than not-for-profit hospitals to managed care pressures and hospital competition in providing charity care.

Nowadays, a mixed ownership markets, for-profit hospitals provide significantly less charity care as not-for-profit hospitals in the market provide more. Unexpectedly, for-profit hospitals were not more influenced by price competition than other hospitals with respect to charity care. Having a unique role in providing charity care may justify continuing tax exemption for not-for-profit hospitals and enhance interest in payment and other policies with regard to conversions to ensure that not-for-profit hospitals continue to be represented in market areas.

I think the effect of these increases reflected our today economic climate.  As for the charity care of the not-for-profit hospitals, I wonder if it’s their way of breaking tax and being exempted in paying a large amount.

  A report by the Internal Revenue Service in July found that not-for-profit hospitals nationwide vary widely in how they report and define their community services.  I believe that the lack of consistency and uniformity makes it difficult to assess the hospitals compliance with the current law.  I think, the changes brought by the IRS would make it easier to compare hospitals and also would help ensure greater accountability.

References

Crenshaw, A. (2004).  Health Insurance Costs Keep Rising.  Retrieved on February 29, 2008 from http://www.washingtonpost.com/wp-dyn/articles/A8287-2004Sep9.html