Report: For-profit model one way New York hospitals can improve financially

New York State laws restricting hospital ownership have not improved cost or quality of care for state residents, according to a new report.

The report — from the Empire Center for Public Policy, an Albany, N.Y.-based independent, nonpartisan, nonprofit think tank — examined the effectiveness of New York's hospital ownership laws. For-profit hospitals are not common in the state  due to 1960s-era laws that generally discourage for-profit ownership and prohibit publicly traded corporations from owning hospitals, according to the report.

In fact, 2015 CMS hospital cost reports showed 86 percent of New York hospitals are nonprofit, and none are for-profit. Proposals by Democrat New York Gov. Andrew Cuomo and others to authorize for-profit ownership of some hospitals been unsuccessful.

Six findings from the report, which examines the current policy:

1. More than 150 New York hospitals rated by Hospital Compare as of early last December ranked in the 50th percentile compared to other states, with an average rating of 2.32 out of five stars.

2. Uncompensated care provided by New York's nonprofit hospitals in 2015 was 1.9 percent of operating revenues. That compared to 2.9 percent for U.S. nonprofit hospitals.

3. New York's per capita spending on hospital care — $3,633 — was 18 percent higher than the average nationwide — $3,079, according to the report, which cites National Health Expenditures data from 2014.

4. Tax exemptions for the state's nonprofit hospitals cost about $2 billion annually in federal, state and local government monies.

5. As of 2015, New York's hospitals collectively had the sixth-lowest profit margins among the 50 U.S. states.

6. "With the industry nationwide in a period of consolidation, many New York hospitals are contemplating changes in ownership, such as joining networks or being acquired by larger institutions. Others are struggling with operating losses and heavy debt loads that put them in jeopardy of closure," the report stated. "Authorizing for-profit ownership would potentially give hospital leaders facing these situations a broader menu of options. It would open the door to previously untapped sources of capital and — if and when an institution chooses to become for-profit—provide additional tax revenues for state and local government."

Read the full report here.


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