How do nonprofit and for-profit hospitals differ when it comes to community engagement and community health investment? One might assume that because for-profit hospitals are not required to provide charity care and other community benefits, that they don’t invest in community health. But that’s not the case, as researchers from the Ohio University Anchors Study found. They used both quantitative data and interviews with for-profit hospital leaders and community members to find out the extent to which for-profit hospitals fulfill the role as “anchor institutions” in their communities.
What is an “anchor institution”?
Hospitals are not just providers of medical care; they are often the largest employer in the city, and have significant political and financial power. The decisions that hospital leaders make about who to hire, how much to pay employees, and how they invest in community health directly impact economic and environmental conditions in their communities.
The Ohio University Anchors project defines anchor institution as an institution “whose actions and interactions have an impact on the population health and social and economic success of communities.” Because hospitals are large and physically rooted within a community, they are often labeled as anchor institutions. Most hospitals in the US are nonprofits, so nonprofits have gotten the most attention for their role impacting community health. But for-profit hospitals also have an opportunity to be anchor institutions. How do they compare to nonprofits in this regard?
Opportunities for action
There are several ways in which for-profits are doing just as well as nonprofits in promoting community health. On the Lown Institute Hospitals Index for-profit hospitals score almost as high as nonprofits when it comes to community benefit spending and higher than nonprofits on their share of Medicaid patients. Recent research confirms that for-profit hospitals spend a similar proportion of their expenses on charity care as nonprofits do. For-profits also score slightly higher on the Lown Index than nonprofits on patient inclusivity by race, income, and education.
These results may seem counterintuitive, but the Anchors Study data provides some important context. According to their new research, the communities in which for-profit hospitals are located have a greater proportion of residents with poor or fair health and more uninsured patients than the communities in which nonprofit hospitals are located. This gives for-profit hospitals more of an opportunity to spend on charity care and other community benefits. And it appears that for-profit hospitals are rising to the challenge.
Case studies from the Anchors Study also show how some for-profit hospitals are acting as anchor institutions by offering free diagnostic services and community health seminars, primary care residency programs, sponsoring food banks, and much much more. In their interviews with for-profit hospital leaders, they showed their commitment to investing in community health, despite not being required to do so. In fact, many saw community involvement as a responsible business decision. “There is nothing better for the delivery of care, and also good business, than to be completely wedded to the communities we serve,” said one hospital official in governmental relations. Another director of community engagement said, “In the business sense, it’s crazy if we’re not involved in our communities…they are an important stakeholder.”
Tradeoffs for for-profits
However, it’s not all rosy when it comes to for-profit hospitals caring for their communities. The Anchors Study found that compared to nonprofit hospitals, for-profit hospitals employ fewer full-time employees per hospital bed. This can have a negative effect on the financial health of communities, if fewer community members receive the benefits that come with full-time employment status.
The Lown Index found that for-profit hospitals have worse pay equity scores on average, compared to nonprofit hospitals. For-profit hospitals also had worse scores on avoiding overuse compared to nonprofits, especially when it comes to invasive procedures, which negatively impacts community health. And a recent report from the largest nurses’ union found that 95 out of the 100 hospitals with the highest markups on their charges in 2018 were for-profit operated. This greatly affects uninsured or out-of-network patients, who often have to pay full price on the inflated hospital charges.
The Anchors Study interviews identified some key barriers in the way of for-profit hospitals: the perception among community members that for-profit hospitals won’t help them; lack of access to government grants and foundation money; legal and compliance issues; and not receiving discounts on drugs through the 340b program. Although for-profits may have more obstacles in their path, there are also incentives pushing hospitals to invest more in community health and success stories that demonstrate how it can be done.