Stack of Money

The Costly Drive for Healthcare Profits

A provocative economic commentary, suggesting patients at nonprofit healthcare organizations receive better care than patients at for-profit enterprises, was recently published by Eduardo Porter in the New York Times. Handing over social services to private enterprise is often considered a good idea, one that can lower costs and drive more efficient delivery. But that assumption may not be true when the service is healthcare and accounting for quality is tricky.

Porter points out that with a greater emphasis on for-profit healthcare, the U.S. spends 18% of our country’s economic output on health. That’s 80% more than the UK and 50% more than Germany or France. And, he says, we deliver lower-quality service, less access, and worse outcomes.

In one example, Porter cites a study of sedative use in Wisconsin nursing homes. The study found that sedatives were used with similar frequency in both church-affiliated nonprofit facilities and for-profit facilities. But patients in the for-profit homes received about four times higher doses. Why? Generic sedatives are cheaper than the labor required to attend to more active, less sedated patients.

He also cites statistics that show patient mortality rates rise when nonprofit hospitals switch to for-profit status with smaller staffs. Not surprisingly, private enterprise may be more concerned with profits than the quality of care. Porter suggests that people look at the upcharge Americans pay versus other countries as a tax in order to better understand what this reliance on the private sector is costing. The drive to increase healthcare profits might be making some parts of the healthcare system more efficient, but it’s not clear that it’s helping patients.

Click here to read more in the New York Times.

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