Best Hospitals: For-Profit or Non-Profit?

US News and World Report (or, for detractors, 'Useless News and World Distort') ranks the nations hospitals and all of the best hospitals are either nonprofit or government-run.  Healthgrades also ranks hospitals and finds that nonprofits do a bit better than for-profits at making it onto their top 50 list, but Healthgrades is a for-profit company with nontransparent incentives and methodology and they do not even publish their rankings, so their report is not very useful for judging the relative merits of different kinds of organizational structures.  Others have done more in-depth analysis comparing the quality of for-profit and non-profit care. For example, Woolhandler and Himmelstein say, "For decades, studies have shown that for-profit hospitals are 3 to 11 percent more expensive than not-for-profit hospitals; no peer-reviewed study has found that for-profit hospitals are less expensive." (Here is the Ebsco link available through the Bluffton library access).
For-profit institutions do better when they specialize in well-defined treatments that are more easily standardized and measured which helps them use incentive pay and helps the market discipline the institution.  For example, Lasik eye surgery is easy to define, advertise, and most importantly, its quality is more clearly visible to patients than the quality of heart bypass operations. For-profit institutions are a rapidly growing and profitable sector of the health industry and the business press is quite enthusiastic about this trend.  Here is a good example of a for-profit specialty hospital in India that has achieved impressive results:

Dr. Shetty, ...entered the limelight in the early 1990s as Mother Teresa's cardiac surgeon, offers cutting-edge medical care in India at a fraction of what it costs elsewhere in the world. His flagship heart hospital charges $2,000, on average, for open-heart surgery, compared with hospitals in the U.S. that are paid between $20,000 and $100,000, depending on the complexity of the surgery.

The approach has transformed health care in India through a simple premise that works in other industries: economies of scale. By driving huge volumes, even of procedures as sophisticated, delicate and dangerous as heart surgery, Dr. Shetty has managed to drive down the cost.  ...'Japanese companies reinvented the process of making cars. That's what we're doing in health care,' Dr. Shetty says. 'What health care needs is process innovation, not product innovation.'

NursingSchools.net summarized a bunch of research on the pros and cons of for-profit hosptials:

1. Over 17 percent of hospitals are for-profit. In 2002, that number was only around 10%, demonstrating a marked growth in the for-profit health care industry over the past decade, growth that's expected to continue over the next five years. [also see this]
2. For-profit hospitals often focus on high-end, high-revenue treatments. Visit a for-profit hospital and you're likely to see a gleaming cardiac wing, top-notch brain surgeons and fancy CT scanners. What you are less likely to see are family planning services, emergency rooms and psychiatric care. These services have a low rate of return on investment and may actually cost rather than bring in money, so many private institutions opt out of providing them. Of course, there are some for-profit hospitals that provide the bulk of these services (and others) to their local communities.
3. More for-profit hospitals engage in morally questionable practices like patient dumping. A study found that for-profits were twice as likely to dump emergency room patients onto other facilities as not-for-profits. Patients who do not have insurance or whose plans will not cover emergency care were more likely to be transferred, often in a manner that violates the Emergency Medical Treatment and Labor Act. Not-for-profits certainly aren't in the clear here, but the difference between the two is striking...
4. It'll cost you more to go to a for-profit hospital. Not necessarily because they just want to charge you more, though profit margins certainly are an issue. For-profit hospitals don't get the tax breaks that not-for-profits do, meaning they have to charge more to make up for it. How much? Expect to pay around 19% more for a visit to a for-profit than a not-for-profit.
5. For-profit hospitals have a higher death rate, on average. While the results of the study have been hotly contested, a group of Canadian researchers found that for-profit hospitals have a slightly higher death rate — around 2% higher. While the study found a difference, researchers were unable to pinpoint just what was causing the disparity, but some think it might have to do with for-profits cutting corners in order to generate more revenue. Of course, that number doesn't mean every for-profit has a higher death rate — it is an average– some may have a much lower chance, while others are much higher....
6. Dementia patients are more likely to be over treated at a for-profit. The practice of tube-feeding patients with advanced dementia has been widely criticized by the top medical journals and isn't medically necessary in most cases, yet doctors are still using it as a treatment for dementia patients. While it occurs in for-profits and not-for-profits alike, patients at the former are 33% more likely to be given a feeding tube. It is even more common at large hospitals in either category, with a whopping 50% greater chance of feeding tube insertion in hospitals with over 300 beds.
7. Patients rate higher loyalty and satisfaction in for-profit ERs. While some for-profits might shy away from these low-return facilities, those who do have them tend to have higher rates of patient satisfaction than their not-for-profit counterparts. Some suggest that the reason for this may be due to for-profits having access to greater capital, meaning they can more easily invest in updated equipment and services. Additionally, not-for-profits are often chronically overburdened with patient volume and suffer from short staffing, factors that could reduce overall satisfaction
8. For-profit hospitals rate consistently lower when delivering care for these common conditions: congestive heart failure, heart attack and pneumonia. If you've got any of these conditions, or suspect you might, you may be better off heading to a not-for-profit if you have a choice. A 2006 study by the Harvard Medical School determined that patients with these conditions were more likely to get high-quality care diagnosis and treatment for these conditions as not-for-profits– a fact they suggest is due to increased staffing and more technology...
9. The impact of for-profit hospital conversion on the community is varied. Some may see for-profit hospitals taking over not-for-profits as a blessing, others as a curse, but the facts don't have much to lend either side. Studies conducted by the Boston University School of Public Health found that some for-profits dramatically increased care to the poor while others decreased it, sometimes as much as 40%. The study found that, on average, there were no long-lasting changes in care between the two types of hospitals, meaning a lot of worries communities have about for-profit health care could be unfounded.