Financial Profit in Medicine: A Position Paper From the American College of Physicians.

The steady growth of corporate interest and influence in the health care sector over the past few decades has created a more business-oriented health care system in the United States, helping to spur for-profit and private equity investment. Proponents say that this trend makes the health care system more efficient, encourages innovation, and provides financial stability to ensure access and improve care. Critics counter that such moves favor profit over care and erode the patient-physician relationship. American College of Physicians (ACP) underscores that physicians are permitted to earn a reasonable income as long as they are fulfilling their fiduciary responsibility to provide high-quality, appropriate care within the guardrails of medical professionalism and ethics. In this position paper, ACP considers the effect of mergers, integration, private equity investment, nonprofit hospital requirements, and conversions from nonprofit to for-profit status on patients, physicians, and the health care system.

Preserving social equity in marketized primary care: strategies in Sweden.

A primary care choice reform launched in Sweden in 2010 led to a rapid growth of private providers. Critics feared that the reform would lead to an increased tendency among new, profit-driven, providers, to select patients with lower health risks. Even if open risk selection is prohibited, providers can select patients in more subtle ways, such as establishing their practices in areas with higher health status. This paper investigates to what extent strategies were employed by local governments to avoid risk selection and whether there were any differences between left- and right-wing governments in this regard. Three main strategies were used: risk adjustment of the financial reimbursements on the basis of health and/or socio-economic status of listed patients; design of patient listing systems; and regulatory requirements regarding the scope and content of the services that had to be offered by all providers. Additionally, left-wing local governments were more prone than right-wing governments to adopt risk adjustment strategies at the onset of the reform but these differences diminished over time. The findings of the paper contribute to our understanding of how social inequalities may be avoided in tax-based health care systems when market-like steering models such as patient choice are introduced.

Optimización de la predicción de problemas financieros en empresas sanitarias privadas españolas aplicando algoritmos genéticos / Optimization of the prediction of financial problems in Spanish private health companies using genetic algorithms

Objetivo: Presentar una metodología para optimizar, a través de la Z'-Score de Altman para empresas privadas, la predicción de entrada en situación de concurso de acreedores (bancarrota) en empresas privadas del sector sanitario español. Método: El método propuesto consiste en la aplicación de los algoritmos genéticos (AG) para encontrar los coeficientes de la fórmula de la cadena de ratios propuestos por Altman en su versión para empresas privadas que optimicen la predicción en empresas privadas sanitarias españolas, maximizando la sensibilidad y la especificidad, y con ello reduciendo los errores de tipo I y tipo II. Con este propósito se ha utilizado una muestra de 5903 empresas del sector sanitario privado español obtenidas de las bases de datos de Sistema de Análisis de Balances Ibéricos (SABI) entre los años 2007 y 2015. Resultados: El modelo predictivo obtenido con los AG presenta mayor exactitud, sensibilidad y especificidad que el propuesto por Altman para empresas privadas, tanto con los datos de test como con todos los datos de la muestra. Conclusiones: El hallazgo más importante del presente estudio es establecer una metodología que logra identificar unos coeficientes optimizados para la Z de Altman, lo cual permite realizar una predicción más precisa de la bancarrota en las empresas sanitarias privadas españolas

Objective: This paper presents a methodology to optimize, using Altman's Z-Score for private companies, the prediction of private companies of the Spanish health sector entering a situation of bankruptcy. Method: The proposed method consists of the application of genetic algorithms (GA) to find the coefficients of the formula of the chain of ratios proposed by Altman in the version of the score for private companies which optimize the prediction for Spanish private health companies, maximizing sensitivity and specificity, and thereby reducing type I and type II errors. For this purpose, a sample of 5,903 companies from the Spanish private health sector obtained from the database of the Iberian Balance Analysis System (SABI) between 2007 and 2015 was used. Results: The results show that the predictive model obtained with the AG presents greater accuracy, sensitivity and specificity than that proposed by Altman for private companies with both test data and all sample data. Conclusions: The most important finding of this study was to establish a methodology that can identify the optimized coefficients for the Altman Z-Score, which allows a more accurate prediction of bankruptcy in Spanish private healthcare companies

Do independent treatment centers offer more value than general hospitals? The case of cataract care.

OBJECTIVE: To identify differences between independent treatment centers (ITCs) and general hospitals (GHs) regarding costs, quality of care, and efficiency. DATA SOURCES: Anonymous claims data (2013-2015) were used. We also obtained quality indicators from a semipublic platform. STUDY DESIGN: This study uses a comparative multilevel analysis, controlling for case mix, to evaluate the performance of ITCs and GHs for patients diagnosed with cataract. DATA COLLECTION: Reimbursement claims were extracted from existing claims databases of the largest Dutch health insurer. Quality indicators were obtained by external agencies through a mixed-mode survey. PRINCIPAL FINDINGS: There are no stark differences in complexity of cases for cataract care. ITCs seem to perform surgeries more frequently per care pathway, but conduct a lower number of health care activities per surgical claim. Total average costs are lower in ITCs compared with GHs, but when adjusted for case mix, the differences in costs are lower. The findings with the adjusted quality differences suggest that ITCs outperform GHs on patient satisfaction, but patients' outcomes are similar. CONCLUSION: This finding supports the postulation-based on the focus factory theory-that ITCs can provide more value for cataract care than GHs.

Canadian genetic healthcare professionals' attitudes towards discussing private pay options with patients.

BACKGROUND: Just as there is inconsistency with respect to coverage of genomic testing with insurance carriers, there is interprovincial discrepancy in Canada. Consequently, the option of private pay (e.g., self pay) arises, which can lead to inequities in access, particularly when patients may not be aware of this option. There are currently no published data regarding how the Canadian genetics community handles discussions of private pay options with patients. The purpose of this study was to assess the attitudes of genetic healthcare professionals (GHPs: medical geneticists, genetic counselors, and genetic nurses) practicing in Canada toward these discussions. METHODS: An online survey was distributed to members of the Canadian College of Medical Geneticists and the Canadian Association of Genetic Counsellors to assess frequencies, rationale, and ethical considerations regarding these conversations. Quantitative data were analyzed using descriptive statistics. RESULTS: Of 144 respondents, 95% reported discussing private pay and 65% reported working in a clinic without a policy on this issue. There were geographic and practice-specific differences. The most common circumstance for these discussions was when a test was clinically indicated (e.g., but funding was denied) followed by when the patient initiated the conversation. The most frequently discussed tests included: multi-gene panels (73% of respondents), noninvasive prenatal testing (62%), and pre-implantation genetic diagnosis (58%). Although 65% felt it was ethical to discuss private pay, 35% indicated it was "sometimes" ethical. CONCLUSION: With the increasing availability of genomic technologies, these findings inform how we practice and demonstrate the need for policy in this area.

Better together: Coexistence of for-profit and nonprofit firms with an application to the U.S. hospice industry.

Many markets maintain a nontrivial mix of both nonprofit and for-profit firms, particularly in health care industries such as hospice, nursing homes, and home health. What are the effects of coexistence vs. dominance of one ownership type? We show how the presence of both ownership types can lead to greater diversity in consumer types served, even if both firms merely profit-maximize. This is the case where firms serve consumers for multiple consumption durations, but where donations are part of a nonprofit firm objective function and happen after services have been provided. This finding is strengthened if the good or service has value beyond immediate consumption or the direct consumer. We show these predictions empirically in the hospice industry, using data containing over 90 percent of freestanding U.S. hospices, 2000-2008. Nonprofit and for-profit providers split the patient market according to length of stay, leading to a wider range of patients being served than in the absence of this coexistence.

The principal-agent problem and owner-managers: An instrumental variables application to nursing home quality.

The literature on provider ownership has primarily focused broadly on for-profits compared with nonprofits and chains versus nonchains. However, the understanding of more nuanced ownership arrangements within individual facilities is limited. Utilizing the principal-agent and managerial control frameworks, we study the role of managerial ownership and its relationship to quality among for-profit nursing homes (NHs). We identify NH administrators with more than 5% ownership (owner-manager) from Ohio Medicaid Cost Reports (2005-2010) and link these data to long-stay resident records in the Minimum Data Set. Using differential distance to the nearest NHs with a salaried manager relative to an owner-manager, we address the differential selection into these two types of NHs. After instrumenting for admissions to owner-managed NHs, quality among long-stay residents at owner-managed NHs is generally better than NHs with salaried managers. We find suggestive evidence that the magnitudes of quality difference are larger when the principal-agent problem is likely more pronounced, such as when NHs that are part of a multifacility chain and located in more concentrated markets.

Managerial Ownership in Nursing Homes: Staffing, Quality, and Financial Performance.

Purpose of the Study: Ownership of nursing homes (NHs) has primarily focused broadly on differences between for-profit (FP), nonprofit (NFP), and government-operated facilities. Yet, among FPs, the understanding of detailed ownership structures at individual NHs is rather limited. Particularly, NH administrators may hold significant equity interests in their facilities, leading to heterogeneous financial incentives and NH outcomes. Through the principal-agent theory, this article studies how managerial ownership of individual facilities affects NH outcomes. Design and Methods: We use a unique panel dataset of Ohio NHs (2005-2010) to empirically examine the relationship between managerial equity ownership and NH staffing, quality, and financial performance. We identify facility administrators as owner-managers if they have more than 5% of the equity stakes or are relatives of the owners. The statistical analysis is based on the pooled ordinary least squares and NH-fixed effect models. Results: We find that owner-managed NHs are associated with higher nursing staff levels compared to other FP NHs. Surprisingly, despite higher staffing levels, owner-managed NHs are not associated with better quality and we find no statistically significant difference in financial performance between owner-managed and nonowner-managed FP NHs. Our results do not support the principal-agent model and we offer alternative explanations for future research. Implications: Our findings provide empirical evidence that NH ownership structures are more nuanced than simply broadly categorizing facilities as FP or NFP, and our results do not fully align with the standard principal-agent model. The role of managerial ownership should be considered in future NH research and policy discussions.

Financial performance, employee well-being, and client well-being in for-profit and not-for-profit nursing homes: A systematic review.

BACKGROUND: Expanding the opportunities for for-profit nursing home care is a central theme in the debate on the sustainable organization of the growing nursing home sector in Western countries. PURPOSES: We conducted a systematic review of the literature over the last 10 years in order to determine the broad impact of nursing home ownership in the United States. Our review has two main goals: (a) to find out which topics have been studied with regard to financial performance, employee well-being, and client well-being in relation to nursing home ownership and (b) to assess the conclusions related to these topics. The review results in two propositions on the interactions between financial performance, employee well-being, and client well-being as they relate to nursing home ownership. METHODOLOGY/APPROACH: Five search strategies plus inclusion and quality assessment criteria were applied to identify and select eligible studies. As a result, 50 studies were included in the review. Relevant findings were categorized as related to financial performance (profit margins, efficiency), employee well-being (staffing levels, turnover rates, job satisfaction, job benefits), or client well-being (care quality, hospitalization rates, lawsuits/complaints) and then analyzed based on common characteristics. FINDINGS: For-profit nursing homes tend to have better financial performance, but worse results with regard to employee well-being and client well-being, compared to not-for-profit sector homes. We argue that the better financial performance of for-profit nursing homes seems to be associated with worse employee and client well-being. PRACTICAL IMPLICATIONS: For policy makers considering the expansion of the for-profit sector in the nursing home industry, our findings suggest the need for a broad perspective, simultaneously weighing the potential benefits and drawbacks for the organization, its employees, and its clients.

A Positive Association Between Hospice Profit Margin And The Rate At Which Patients Are Discharged Before Death.

Hospice care is designed to support patients and families through the final phase of illness and death. Yet for more than a decade, hospices have steadily increased the rate at which they discharge patients before death-a practice known as "live discharge." Although certain live discharges are consistent with high-quality care, regulators have expressed concern that some hospices' desire to maximize profits drives them to inappropriately discharge patients. We used Medicare claims data for 2012-13 and cost reports for 2011-13 to explore relationships between hospice-level financial margins and live discharge rates among freestanding hospices. Adjusted analyses showed positive and significant associations between both operating and total margins and hospice-level rates of live discharge: One-unit increases in operating and total margin were associated with increases of 3 percent and 4 percent in expected hospice-level live discharge rates, respectively. These findings suggest that additional research is needed to explore links between profitability and patient-centeredness in the Medicare hospice program.

For-profit status and industry evolution in health care markets: evidence from the dialysis industry.

This paper examines why for-profit dialysis providers have displaced non-profit providers over the last 25 years. Using detailed data on individual markets' evolutions, I find that for-profit facilities were quicker to enter growing markets and slower to exit declining ones than non-profit facilities. Moreover, for-profit providers' presence in a market had a larger impact on the exit and entry behavior of competitors. These results suggest that for-profit dialysis providers have an advantage in static competition relative to non-profit providers, and that this-rather than lower entry costs-explains their increasing prominence. Additional empirical analyses indicate that for-profits' advantage cannot solely be attributed to efficiencies related to membership in a large, multi-facility chain. This further suggests that managerial incentives have had an economically significant impact on long-run market structure in this industry.

The Avahan Transition: Effects of Transition Readiness on Program Institutionalization and Sustained Outcomes.

BACKGROUND: With declines in development assistance for health and growing interest in country ownership, donors are increasingly faced with the task of transitioning health programs to local actors towards a path to sustainability. Yet there is little available guidance on how to measure and evaluate the success of a transition and its subsequent effects. This study assesses the transition of the Avahan HIV/AIDS prevention program in India to investigate how preparations for transition affected continuation of program activities post-transition. METHODS: Two rounds of two surveys were conducted and supplemented by data from government and Avahan Computerized Management Information Systems (CMIS). Exploratory factor analysis was used to develop two measures: 1) transition readiness pre-transition, and 2) institutionalization (i.e. integration of initial program systems into organizational procedures and behaviors) post-transition. A fixed effects model was built to examine changes in key program delivery outcomes over time. An ordinary least square regression was used to assess the relationship between transition readiness and sustainability of service outcomes both directly, and indirectly through institutionalization. RESULTS: Transition readiness data revealed 3 factors (capacity, alignment and communication), on a 15-item scale with adequate internal consistency (alpha 0.73). Institutionalization was modeled as a unidimensional construct, and a 12-item scale demonstrated moderate internal consistency (alpha 0.60). Coverage of key populations and condom distribution were sustained compared to pre-transition levels (p<0.01). Transition readiness, but not institutionalization, predicted sustained outcomes post-transition. Transition readiness did not necessarily lead to institutionalization of key program elements one year after transition. CONCLUSION: Greater preparedness prior to transition is important to achieve better service delivery outcomes post-transition. This paper illustrates a methodology to measure transition readiness pre-transition to identify less ready organizations or program components in advance, improving the likelihood of service sustainability. Further research is needed around the conceptualization and development of measures of institutionalization and its effects on long-term program sustainability.

The Service-Profit Chain in Spine Surgery.

Medicine has always been a service industry (as opposed to a manufacturing industry), as there is a shift from volume to value in health care, this point is becoming increasingly important. The delivery of good care extends beyond the technical aspects of performing a complex operation or prescribing the right type of medicine. Intuitively physicians have always understood the value of the physician-patient relationship, and its correlation to a good outcome. As patients are increasingly being forced to spend a greater portion of their personal income on health care through high-deductible plans and larger co-pays, physicians have to differentiate themselves through the delivery of great service beyond the delivery of superior health outcomes. Understanding the service-profit chain can help physicians succeed in the transition to a value-based health care system.