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We examine variation in US hospital quality across ownership, chain membership, and market concentration. We propose a new measure of quality derived from penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program, and use regression models to risk-adjust for hospital characteristics and county demographics. While the overall association between for-profit ownership and quality is negative, there is evidence of substantial heterogeneity. The quality of for-profit relative to non-profit hospitals declines with increasing market concentration. Moreover, the quality gap is primarily driven by for-profit chains. While the competition result mirrors earlier findings in the literature, the chain result appears to be new: it suggests that any potential quality gains afforded by chains are mostly realized by not-for-profit hospitals., (© 2024 The Author(s). Health Economics published by John Wiley & Sons Ltd.)

Objective: To understand US hospitals' initial strategic responses to the federal price transparency rule that took effect January 2021., Data Sources and Study Setting: Primary interview data collected from 12 not-for-profit hospital organizations in six US metropolitan markets. All but one organization were multihospital systems; the 12 organizations represent a total of 81 hospitals., Study Design: Exploratory, cross-sectional, qualitative interview study of a convenience sample of hospital organizations across six geographically and compliance diverse markets., Data Collection/extraction Methods: In-depth, semi-structured, qualitative interviews with 16 key informants across sampled organizations between November 2021 and March 2022. Interviews solicited data about internal organizational factors and external market factors affecting strategic responses. Transcribed interviews were de-identified, coded, and analyzed using the constant comparative method., Principal Findings: Hospitals' strategic responses were influenced internally by the degree of the regulation's alignment with organizational values and goals, and task complexity vis-a-vis available resources. We found extensive variation in organizational capabilities to comply, and all but one organization relied on consultants and vendors to some degree. Key external factors driving strategic responses were hospitals' variable perceptions about how available price information would affect their competitive position, bottom line, and reputation. Organizations with more confidence in their interpretation of the environment, including how peers or purchasers would behave, and greater clarity in their own organization's position and goals, had more definitive initial strategic responses. In the first year, organizations' strategic responses skewed toward compliance, especially for the rule's consumer shopping requirements., Conclusions: A deeper understanding of the realities of operationalizing price transparency policy for hospitals is needed to improve its impact., (© 2023 The Authors. Health Services Research published by Wiley Periodicals LLC on behalf of Health Research and Educational Trust.)

Hospital CEO salaries have grown quickly over the past two decades. We investigate correlates of rising nonprofit hospital CEO pay between 2012 and 2019 by merging compensation data from Candid's IRS 990 forms with hospital data from the National Academy for State Health Policy Hospital Cost Tool. Almost half of the measured increase in CEO compensation (44.5%) accrued to a "base case" CEO, who was leading a non-teaching hospital system or independent hospital with fewer than 100 beds that earned 0 profits and provided no charity care. Another 28.5% of the measured salary increase resulted from changes in the generosity with which observable metrics were rewarded, particularly the reward for heading a system with 500 or more beds. The remaining 27% resulted mostly from hospital systems or single hospitals that increased their profits or bed size over time. The increase in CEO compensation associated with leading larger healthcare systems and earning greater profits may explain the increase in healthcare system consolidation which has occurred over the last several years., Competing Interests: I have read the journal’s policy, and the authors of this manuscript have the following competing interests: the authors receive funding from Arnold Ventures. VH and MNS receive funding from the Health Care Service Corporation and the National Academy of State Health Policy. The funders had no role in study design, data collection and analysis, publication decision, or manuscript preparation. VH is a member of the Blue Cross Blue Shield of Texas Community Advisory Board, Community Health Choice: Houston Business Coalition on Healthcare Advisory Board, Texas Employers for Affordable Health Care Advisory Board, and the Blue Cross Blue Shield Research Alliance. VH receives support for attending membership committee meetings from the National Academy of Medicine. VH owned stock in IBM. “However, this does not alter our adherence to PLOS ONE policies on sharing data and materials.”, (Copyright: © 2024 Jenkins et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.)

Objectives. To examine content of financial assistance polices (FAPs) among US tax-exempt hospitals and determine whether restrictive policies were associated with reduced charity care spending. Methods. Using hospital tax filings with the Internal Revenue Service in 2016 and FAPs obtained from hospital Web sites, we examined characteristics of FAPs and associated expenditures for charity care in a representative sample of 170 tax-exempt hospitals. We identified common eligibility requirements and used them to define restrictiveness of FAPs. Results. FAPs were characterized by various ways to exclude patients, a patchwork of coverage for typical health care services, and wide-ranging discounts. FAP expenditures were lowest among restrictive hospitals in states that expanded Medicaid as part of the Affordable Care Act and highest among nonrestrictive hospitals in nonexpansion states. FAP expenses did not differ by hospital restrictiveness alone. Conclusions. Standardizing common eligibility requirements among FAPs carries potential benefits with regard to optimizing charity care for community benefit and achieving at least some level of equity; however, further policy efforts must account for additional restrictions, charges, and exclusions to be effective.

Background: In an era of increasing healthcare costs, the number and value of nonclinical workers, especially hospital management, has come under increased study. Compensation of hospital executives, especially at major nonprofit medical centers, and the "wage gap" with physicians and clinical staff has been highlighted in the national news. To our knowledge, a systematic analysis of this wage gap and its importance has not been investigated., Questions/purposes: (1) How do wage trends compare between physicians and executives at major nonprofit medical centers? (2) What are the national trends in the wages and the number of nonclinical workers in the healthcare industry? (3) What do nonclinical workers contribute to the growth in national cost of healthcare wages? (4) How much do wages contribute to the growth of national healthcare costs? (5) What are the trends in healthcare utilization?, Methods: We identified chief executive officer (CEO) compensation and chief financial officer (CFO) compensation at 22 major US nonprofit medical centers, which were selected from the US News & World Report 2016-2017 Hospital Honor Roll list and four health systems with notable orthopaedic departments, using publicly available Internal Revenue Service 990 forms for the years 2005, 2010, and 2015. Trends in executive compensation over time were assessed using Pearson product-moment correlation tests. As institution-specific compensation data is not available, national mean compensation of orthopaedic surgeons, pediatricians, and registered nurses was used as a surrogate. We chose orthopaedic surgeons and pediatricians for analysis because they represent the two ends of the physician-compensation spectrum. US healthcare industry worker numbers and wages from 2005 to 2015 were obtained from the Bureau of Labor Statistics and used to calculate the national cost of healthcare wages. Healthcare utilization trends were assessed using data from the Agency for Healthcare Quality and Research, the National Ambulatory Medical Care Survey, and the National Hospital Ambulatory Medical Care Survey. All data were adjusted for inflation based on 2015 Consumer Price Index., Results: From 2005 to 2015, the mean major nonprofit medical center CEO compensation increased from USD 1.6 ± 0.9 million to USD 3.1 ± 1.7 million, or a 93% increase (R = 0.112; p = 0.009). The wage gap increased from 3:1 to 5:1 with orthopaedic surgeons, from 7:1 to 12:1 with pediatricians, and from 23:1 to 44:1 with registered nurses. We saw a similar wage-gap trend in CFO compensation. From 2005 to 2015, mean healthcare worker wages increased 8%. Management worker wages increased 14%, nonclinical worker wages increased 7%, and physician salaries increased 10%. The number of healthcare workers rose 20%, from 13 million to 15 million. Management workers accounted for 3% of this growth, nonclinical workers accounted for 27%, and physicians accounted for 5% of the growth. From 2005 to 2015, the national cost-burden of healthcare worker wages grew from USD 663 billion to USD 865 billion (a 30% increase). Nonclinical workers accounted for 27% of this growth, management workers accounted for 7%, and physicians accounted for 18%. In 2015, there were 10 nonclinical workers for every one physician. The cost of healthcare worker wages accounted for 27% of the growth in national healthcare expenditures. From 2005 to 2015, the number of inpatient stays decreased from 38 million to 36 million (a 5% decrease), the number of physician office visits increased from 964 million to 991 million (a 3% increase), and the number of emergency department visits increased from 115 million to 137 million (a 19% increase)., Conclusions: There is a fast-rising wage gap between the top executives of major nonprofit centers and physicians that reflects the substantial, and growing, cost of nonclinical worker wages to the US healthcare system. However, there does not appear to be a proportionate increase in healthcare utilization. These findings suggest a growing, substantial burden of nonclinical tasks in healthcare. Methods to reduce nonclinical work in healthcare may result in important cost-savings., Level of Evidence Level: IV, economic and decision analysis.

Importance: Increasing value requires improving quality or decreasing costs. In surgery, estimates for the cost of 1 minute of operating room (OR) time vary widely. No benchmark exists for the cost of OR time, nor has there been a comprehensive assessment of what contributes to OR cost., Objectives: To calculate the cost of 1 minute of OR time, assess cost by setting and facility characteristics, and ascertain the proportion of costs that are direct and indirect., Design, Setting, and Participants: This cross-sectional and longitudinal analysis examined annual financial disclosure documents from all comparable short-term general and specialty care hospitals in California from fiscal year (FY) 2005 to FY2014 (N = 3044; FY2014, n = 302). The analysis focused on 2 revenue centers: (1) surgery and recovery and (2) ambulatory surgery., Main Outcomes and Measures: Mean cost of 1 minute of OR time, stratified by setting (inpatient vs ambulatory), teaching status, and hospital ownership. The proportion of cost attributable to indirect and direct expenses was identified; direct expenses were further divided into salary, benefits, supplies, and other direct expenses., Results: In FY2014, a total of 175 of 302 facilities (57.9%) were not for profit, 78 (25.8%) were for profit, and 49 (16.2%) were government owned. Thirty facilities (9.9%) were teaching hospitals. The mean (SD) cost for 1 minute of OR time across California hospitals was $37.45 ($16.04) in the inpatient setting and $36.14 ($19.53) in the ambulatory setting (P = .65). There were no differences in mean expenditures when stratifying by ownership or teaching status except that teaching hospitals had lower mean (SD) expenditures than nonteaching hospitals in the inpatient setting ($29.88 [$9.06] vs $38.29 [$16.43]; P = .006). Direct expenses accounted for 54.6% of total expenses ($20.40 of $37.37) in the inpatient setting and 59.1% of total expenses ($20.90 of $35.39) in the ambulatory setting. Wages and benefits accounted for approximately two-thirds of direct expenses (inpatient, $14.00 of $20.40; ambulatory, $14.35 of $20.90), with nonbillable supplies accounting for less than 10% of total expenses (inpatient, $2.55 of $37.37; ambulatory, $3.33 of $35.39). From FY2005 to FY2014, expenses in the OR have increased faster than the consumer price index and medical consumer price index. Teaching hospitals had slower growth in costs than nonteaching hospitals. Over time, the proportion of expenses dedicated to indirect costs has increased, while the proportion attributable to salary and supplies has decreased., Conclusions and Relevance: The mean cost of OR time is $36 to $37 per minute, using financial data from California's short-term general and specialty hospitals in FY2014. These statewide data provide a generalizable benchmark for the value of OR time. Furthermore, understanding the composition of costs will allow those interested in value improvement to identify high-yield targets.

Do nonprofit hospitals provide enough community benefits to justify their tax exemptions? States have sought to enhance nonprofit hospitals' accountability and oversight through regulation, including requirements to report community benefits, conduct community health needs assessments, provide minimum levels of community benefits, and adhere to minimum income eligibility standards for charity care. However, little research has assessed these regulations' impact on community benefits. Using 2009-11 Internal Revenue Service data on community benefit spending for more than eighteen hundred hospitals and the Hilltop Institute's data on community benefit regulation, we investigated the relationship between these four types of regulation and the level and types of hospital-provided community benefits. Our multivariate regression analyses showed that only community health needs assessments were consistently associated with greater community benefit spending. The results for reporting and minimum spending requirements were mixed, while minimum income eligibility standards for charity care were unrelated to community benefit spending. State adoption of multiple types of regulation was consistently associated with higher levels of hospital-provided community benefits, possibly because regulatory intensity conveys a strong signal to the hospital community that more spending is expected. This study can inform efforts to design regulations that will encourage hospitals to provide community benefits consistent with policy makers' goals., (Copyright © 2018 by Duke University Press.)

About 60% of the US hospitals are not-for-profit and it is not clear how traditional theories of capital structure should be adapted to understand the borrowing behavior of not-for-profit hospitals. This paper identifies important determinants of capital structure taken from theories describing for-profit firms as well as prior literature on not-for-profit hospitals. We examine the differential effects these factors have on the capital structure of for-profit and not-for-profit hospitals. Specifically, we use a difference-in-differences regression framework to study how differences in leverage between for-profit and not-for-profit hospitals change in response to key explanatory variables (i.e. tax rates and bankruptcy costs). The sample in this study includes most US short-term general acute hospitals from 2000 to 2012. We find that personal and corporate income taxes and bankruptcy costs have significant and distinct effects on the capital structure of for-profit and not-for-profit hospitals. Specifically, relative to not-for-profit hospitals: (1) higher corporate income tax encourages for-profit hospitals to increase their debt usage; (2) higher personal income tax discourages for-profit hospitals to use debt; and (3) higher expected bankruptcy costs lead for-profit hospitals to use less debt. Over the past decade, the capital structure of for-profit hospitals has been more flexible as compared to that of not-for-profit hospitals. This may suggest that not-for-profit hospitals are more constrained by external financing resources. Particularly, our analysis suggests that not-for-profit hospitals operating in states with high corporate taxes but low personal income taxes may face particular challenges of borrowing funds relative to their for-profit competitors.

On a sunny Thursday morning, June 25, 2015, President Obama strode into the Rose Garden and declared a victory for the Affordable Care Act (ACA) by stating that the act was working exactly the way it was supposed to work. He further reinforced that ACA has enabled young Americans up to the age of 26 to remain on their parents' health plans. It disallows the insurance companies from denying coverage based on preexisting conditions. Above all, an expansion of Medicaid has also brought an additional 16 million Americans under health coverage in a span of less than 2 years. The ACA went into full effect on January 1, 2014, ushering in health insurance reforms and new health coverage options across the country. As the states expand Medicaid and provide new coverage options through the federal health insurance marketplace, they are busy streamlining application and enrollment processes for coverage programs. This article highlights the positive impact of the ACA on uninsured and the challenges that not-for-profit and public hospitals are facing as they navigate the new health care landscape., (© 2016 American Society for Healthcare Risk Management of the American Hospital Association.)

Seeing a need to refresh the current guidelines, the Financial Accounting Standards Board (FASB) proposed an update to the financial accounting and reporting model for not-for-profit entities. In a response to solicited feedback, the board is now revisiting its proposed update and has set forth a plan to finalize its new guidelines. The FASB continues to solicit and respond to feedback as the process progresses.

The federal government provides special tax-exemption status, known as the community benefit standard, to some nonprofit hospitals. It is not known if hospitals that claim the community benefit standard provide more or different services from those provided by hospitals that do not claim the community benefit status. Guided by the socioecological model, this quantitative study investigated 95 hospitals serving 52 counties in South Texas--43 that claimed a community benefit and 52 that did not. The independent variables were hospitals that claimed the community benefit standard versus hospitals that did not. The dependent variables were the three essential criteria and the 13 reported services used to meet the community benefit standard. The study results show that all hospitals that claimed the community benefit standard met two of the three required criteria. However, only 22 of 43 hospitals had a full-time emergency department (ED), the third criterion. Χ² analysis showed statistically significant differences for only two of the five common services: having an ED and community education for community benefit hospitals versus noncommunity benefit hospitals. On average, hospitals that claimed the community benefit spent 100 times more money on community services than hospitals that did not claim the community benefit. Further investigation is needed to determine the reasons for the gap in services pertaining to EDs, trauma care, neonatal intensive care, free-standing clinics, collaborative efforts, other medical services, education of patients, community health education, and other education services.

Spatial wage theory suggests that employers in different regions may offer different pay rates to reflect local amenities and cost of living. Higher wages may be required to compensate for a less pleasant environment or a higher cost of living. If wages in a competing sector within an area are less flexible and therefore less competitive this may lead to an inability to employ staff. This paper considers the market for nursing staff in France where there is general regulation of wages and public hospitals compete for staff with the private hospital and non-hospital sectors. We consider two types of nursing staff, registered and assistant nurses and first establish the degree of spatial variation in the competitiveness of pay of nurses in public hospitals. We then consider whether these spatial variations are associated with variation in the employment of nursing staff. We find that despite regulation of pay in the public and private sector, there are substantial local variations in the competitiveness of nurses' pay. We find evidence that the spatial variations in the competitiveness of pay are associated with relative numbers of assistant nurses but not registered nurses. While we find the influence of the competitiveness of pay is small, it suggests that nonpay conditions may be an important factor in adjusting the labour market as might be expected in such a regulated market.

In exchange for sizable tax exemptions, not-for-profit hospitals must engage in activities that meet the Internal Revenue Service's community benefit standard. The provision of charity care-free care to those unable to pay-can help meet that standard. Bad debt, the other form of uncompensated care, cannot be used to meet the standard, although Medicaid shortfalls can. However, the ACA lacks guidelines for providing charity care, and federal law sets no minimum requirements for community benefit activities. Using data from California, we examined whether the levels of charity and uncompensated care provided differed across general acute care hospitals by profit status and other characteristics during 2011-13. The mean proportion of total operating expenses spent on charity care differed significantly between not-for-profit (1.9 percent) and for-profit hospitals (1.4 percent), in contrast to the mean proportion spent on uncompensated care. Both types of spending varied widely across hospitals. Policy makers should consider measures that remove disincentives to meeting the persistent considerable need for charity care-for example, increasing supports to offset rising Medicaid shortfalls resulting from program expansion-and facilitate the tracking of ACA impacts on the distribution of charity care and uncompensated care delivery., (Project HOPE—The People-to-People Health Foundation, Inc.)

The federal government encourages public support for charitable activities by allowing people to deduct donations to tax-exempt organizations on their income tax returns. Tax-exempt hospitals are major beneficiaries of this policy because it encourages donations to the hospitals while shielding them from federal and state tax liability. In exchange, these hospitals must engage in community benefit activities, such as providing care to indigent patients and participating in Medicaid. The congressional Joint Committee on Taxation estimated the value of the nonprofit hospital tax exemption at $12.6 billion in 2002--a number that included forgone taxes, public contributions, and the value of tax-exempt bond financing. In this article we estimate that the size of the exemption reached $24.6 billion in 2011. The Affordable Care Act (ACA) brings a new focus on community benefit activities by requiring tax-exempt hospitals to engage in communitywide planning efforts to improve community health. The magnitude of the tax exemption, coupled with ACA reforms, underscores the public's interest not only in community benefit spending generally but also in the extent to which nonprofit hospitals allocate funds for community benefit expenditures that improve the overall health of their communities., (Project HOPE—The People-to-People Health Foundation, Inc.)

Objectives: We investigated whether federally tax-exempt hospitals consider community health needs when deciding how much and what types of community benefits to provide., Methods: Using 2009 data from hospital tax filings to the Internal Revenue Service and the 2010 County Health Rankings, we employed both univariate and multivariate analyses to examine the relationship between community health needs and the types and levels of hospitals' community benefit expenditures. The study sample included 1522 private, tax-exempt hospitals throughout the United States., Results: We found some patterns between community health needs and hospitals' expenditures on community benefits. Hospitals located in communities with greater health needs spent more as a percentage of their operating budgets on benefits directly related to patient care. By contrast, spending on community health improvement initiatives was unrelated to community health needs., Conclusions: Important opportunities exist for tax-exempt hospitals to improve the alignment between their community benefit activities and the health needs of the community they serve. The Affordable Care Act requirement that hospitals conduct periodic community health needs assessments may be a first step in this direction.

Tax-exempt hospitals and health systems often borrow long-term debt to fund capital investments. Lenders use bond ratings as a standard metric to assess whether to lend funds to a hospital. Credit rating agencies have historically relied on financial performance measures and a hospital's ability to service debt obligations to determine bond ratings. With the growth in pay-for-performance-based reimbursement models, rating agencies are expanding their hospital bond rating criteria to include hospital utilization and value-based purchasing (VBP) measures. In this study, we evaluated the relationship between the Hospital VBP domains--Clinical Process of Care, Patient Experience of Care, Outcome, and Medicare Spending per Beneficiary (MSPB)--and hospital bond ratings. Given the historical focus on financial performance, we hypothesized that hospital bond ratings are not associated with any of the Hospital VBP domains. This was a retrospective, cross-sectional study of all hospitals that were rated by Moody's for fiscal year 2012 and participated in the Centers for Medicare & Medicaid Services' VBP program as of January 2014 (N = 285). Of the 285 hospitals in the study, 15% had been assigned a bond rating of Aa, and 46% had been assigned an A rating. Using a binary logistic regression model, we found an association between MSPB only and bond ratings, after controlling for other VBP and financial performance scores; however, MSPB did not improve the overall predictive accuracy of the model. Inclusion of VBP scores in the methodology used to determine hospital bond ratings is likely to affect hospital bond ratings in the near term.

The current community benefit standard for nonprofit hospital tax exemption has been the subject of mounting criticism. Many different constituencies have advanced the view that in its present form it fails to ensure that nonprofit hospitals provide adequate benefits to their communities in exchange for their tax exemption. In contrast, hospitals have often expressed the concern that the community benefit standard in its current form is vague and therefore difficult to comply with. Various suggestions have been made regarding how the existing community benefit standard could be improved or even replaced. In this article, we first discuss the historical and legal development of the community benefit standard. We then present the key controversies that have emerged in recent years and the policy responses attempted thus far. Finally, we evaluate possible future policy directions, which reform efforts could follow.

Fundraising has become increasingly important to nonprofit hospitals as access to capital has grown more difficult and reimbursement for services more complex. This study analyzes the variation in organizational characteristics and fundraising performance among nonprofit acute care hospitals in the United States to identify and measure critical factors related to one key fundraising performance indicator: public support. Results indicate that the presence of an endowment, along with its value, investments in fundraising, and the geographic location of the organization, account for approximately 46% of variance in public support among nonprofit hospitals. The use of a separate foundation for the fundraising operation is not necessarily associated with measures of fundraising success; however, a majority of hospitals do use a foundation, signaling a strategic choice that may be made for numerous reasons. The study results and limitations are discussed and recommendations are made for maximizing the effectiveness of the fundraising enterprise within nonprofit hospitals. Increasing awareness of challenges associated with fundraising success will enhance the strategic management of fundraising operations by hospital executives and board members.

Unlabelled: POLICY POINTS: Health policy in the United States has, for more than a century, simultaneously and paradoxically incentivized the growth as well as the commercialization of nonprofit organizations in the health sector. This policy paradox persists during the implementation of the Affordable Care Act of 2010., Context: For more than a century, policy in the United States has incentivized both expansion in the number and size of tax-exempt nonprofit organizations in the health sector and their commercialization. The implementation of the Affordable Care Act of 2010 (ACA) began yet another chapter in the history of this policy paradox., Methods: This article explores the origin and persistence of the paradox using what many scholars call "interpretive social science." This methodology prioritizes history and contingency over formal theory and methods in order to present coherent and plausible narratives of events and explanations for them. These narratives are grounded in documents generated by participants in particular events, as well as conversations with them, observing them in action, and analysis of pertinent secondary sources. The methodology achieves validity and reliability by gathering information from multiple sources and making disciplined judgments about its coherence and correspondence with reality., Findings: A paradox with deep historical roots persists as a result of consensus about its value for both population health and the revenue of individuals and organizations in the health sector. Participants in this consensus include leaders of governance who have disagreed about many other issues. The paradox persists because of assumptions about the burden of disease and how to address it, as well as about the effects of biomedical science that is translated into professional education, practice, and the organization of services for the prevention, diagnosis, treatment, and management of illness., Conclusions: The policy paradox that has incentivized the growth and commercialization of nonprofits in the health sector since the late 19th century remains influential in health policy, especially for the allocation of resources. However, aspects of the implementation of the ACA may constrain some of the effects of the paradox., (© 2015 Milbank Memorial Fund.)

Nonprofit hospitals are expected to serve their communities as charitable organizations in exchange for the tax exemption benefits they receive. With the passage into law of the Affordable Care Act, additional guidelines were generated in 2010 to ensure nonprofit hospitals are compliant. Nonetheless, the debate continues on whether nonprofit hospitals provide adequate charity care to their patient population. In this study, charity care provided by 29 Washington State nonprofit urban hospitals was examined for 2011 using financial data from the Washington State Department of Health. Charity care levels were compared to both income tax savings and gross revenues to generate two financial ratios that were analyzed according to hospital bed size and nonprofit ownership type. For the first ratio, 97% of the hospitals (28 of 29) were providing charity care in greater amounts than the tax savings they accrued. The average ratio value using total charity care and total income tax savings of all the hospitals in the study was 6.10, and the median value was 3.46. The nonparametric Kruskal-Wallis test results by bed size and nonprofit ownership type indicate that ownership type has a significant effect on charity care to gross revenue ratios (p = .020). Our analysis indicates that church-owned hospitals had higher ratios of charity care to gross revenues than did the other two ownership types--government and voluntary--in this sample. Policy implications are offered and further studies are recommended to analyze appropriate levels of charity care in nonprofit hospitals given new requirements for maintaining a hospital's tax-exempt status.

Importance: An increasing number of hospitals have converted to for-profit status, prompting concerns that these hospitals will focus on payer mix and profits, avoiding disadvantaged patients and paying less attention to quality of care., Objective: To examine characteristics of US acute care hospitals associated with conversion to for-profit status and changes following conversion., Design, Setting, and Participants: Retrospective cohort study conducted among 237 converting hospitals and 631 matched control hospitals. Participants were 1,843,764 Medicare fee-for-service beneficiaries at converting hospitals and 4,828,138 at control hospitals., Exposures: Conversion to for-profit status, 2003-2010., Main Outcomes and Measures: Financial performance measures, quality process measures, mortality rates, Medicare volume, and patient population for the 2 years prior and the 2 years after conversion, excluding the conversion year, assessed using difference-in-difference models., Results: Hospitals that converted to for-profit status were more often small or medium in size, located in the south, in an urban or suburban location, and were less often teaching institutions. Converting hospitals improved their total margins (ratio of net income to net revenue plus other income) more than controls (2.2% vs 0.4% improvement; difference in differences, 1.8% [ 95% CI, 0.5% to 3.1%]; P = .007). Converting hospitals and controls both improved their process quality metrics (6.0% vs 5.6%; difference in differences, 0.4% [95% CI, -1.1% to 2.0%]; P = .59). Mortality rates did not change at converting hospitals relative to controls for Medicare patients overall (increase of 0.1% vs 0.2%; difference in differences, -0.2% [95% CI, -0.5% to 0.2%], P = .42) or for dual-eligible or disabled patients. There was no change in converting hospitals relative to controls in annual Medicare volume (-111 vs -74 patients; difference in differences, -37 [95% CI, -224 to 150]; P = .70), Disproportionate Share Hospital Index (1.7% vs 0.4%; difference in differences, 1.3% [95% CI, -0.9% to 3.4%], P = .26), the proportion of patients with Medicaid (-0.2% vs 0.4%; difference in differences, -0.6% [95% CI, -2.0% to 0.8%]; P = .38) or the proportion of patients who were black (-0.4% vs -0.1%; difference in differences, -0.3% [95% CI, -1.9% to 1.3%]; P = .72) or Hispanic (0.1% vs -0.1%; difference in differences, 0.2% [95% CI, -0.3% to 0.7%]; P = .50)., Conclusions and Relevance: Hospital conversion to for-profit status was associated with improvements in financial margins but not associated with differences in quality or mortality rates or with the proportion of poor or minority patients receiving care.