Changes in Hospital Performance after Ownership Conversions

Abstract

This paper examines the effects of ownership conversions on hospital performance between 1987 and 1998 in areas of financial performance, staffing, capacity, and unprofitable care. Conversions to government and for-profit ownership both increased the profit margin: the former due to rising revenue, and the latter due to reduced operating costs and rising revenue. Hospitals that converted to for-profit ownership had the greatest reduction in staffing relative to other converted hospitals. There was little change in bed capacity after conversion to for-profit status, but some reductions in bed capacity after conversion to government or nonprofit status. No conversion of any kind led to a reduced amount of unprofitable care, but conversion to private ownership (nonprofit and for-profit) increased the probability of trauma center closures.