For-Profit Firms Buying Charity Hospitals As Recession Takes Toll

Cash-strapped nonprofit hospitals and for-profit firms are increasingly forging bonds of necessity and opportunity, but critics question whether the deals help patients, Kaiser Health News reports. "Cash-poor nonprofit hospitals, unable to borrow money for needed improvements in facilities and equipment, are eagerly seeking for-profit suitors. And for-profit hospital companies and investment firms - eyeing the improving economy and the expected influx of millions more insured Americans as a result of the new federal health overhaul law - see opportunity in the nonprofit sector. But the transactions are also reigniting a long-running debate: Are the deals good for patients, or do they result in an overemphasis on profits that poses a threat to the quality of care? " The buyouts are likely to accelerate this year, merger-and-acquisition experts say (Gold, 7/13).

Meanwhile, "[h]ospitals nationwide have been hammered by decreases in patient volumes and reimbursements from both private insurance and government programs," Memphis Business Journal reports. "But local hospital executives and staffing companies say Memphis is largely bypassing the trend of wholesale layoffs by selective cuts and leaving certain positions unfilled." In June, the American Hospital Association "said 70% of hospitals were reporting fewer patient visits and elective surgeries, based on a survey of 572 hospitals collected between March and April. On top of that, the temporary increase in Medicaid matching funds runs out at the end of 2010, and there is the uncertainty of health care reform" (Sheffield, 7/13).