Foundations of Practice

By David Keepnews, JD, MPH, RN

ANA Examines Privatization, For-Profit Conversions

The conversion of hospitals from public to private and both hospitals and health plans from nonprofit to for-profit has drawn considerable public attention and controversy. The acquisition of community hospitals by for-profit chains, the privatization of public facilities (often through mergers with private institutions), and the conversion of nonprofit health plans into profit-making enterprises have all raised important questions. How do such changes affect an organization's mission? What is the impact on quality, access, and affordability? How do they affect staffing and the rights of health care employees? And who should have the final say on these changes?

Many consumers, providers, and policy makers have voiced concerns that privatization of public facilities and the conversion to for-profit status of nonprofit facilities represent a move away from these institutions' historic missions to serve the poor and underserved. In the case of privatization, many also have raised questions about the shift of publicly owned facilities to private hands. In regard to for-profit conversions, concerns stem from the fact that facilities that once benefited from tax-exempt status in exchange for providing public services have now shifted focus to the generation of shareholder profit.

The American Nurses Association took up these issues in a position statement adopted late last year. The statement was developed by the ANA's Congress on Nursing Economics, based on initial work by the Institute of Constituent Member Collective Bar-gaining Programs. The position statement expresses the ANA's "alarm at the rate and breadth of privatization and for-profit conversions," declaring that "communities benefit from a mix of provider types, including public and nonprofit private facilities, where feasible." According to the ANA statement, "the yardstick against which a proposal for privatization or for-profit conversion should be judged is its effect on access to affordable, safe, and quality health care services."

The ANA statement recognizes the contributions, "both real and potential," of nonprofits, and consequently, declares the ANA's support for "efforts to maintain a strong nonprofit health care sector." At the same time, the ANA notes that there's wide variability among nonprofit hospitals and insurers in their records and performance in providing community-focused, quality, accessible care. Accordingly, the ANA "believes that all hospitals, systems, and health plans should be held to similar, clear standards for providing safe, quality, and affordable health care services."

These standards include public disclosure of staffing levels and outcomes, as proposed in the ANA-supported Patient Safety Act (H.R. 1165), and disclosure of provision of uncompensated care and other measures of community benefit. According to the ANA, "full public disclosure of all this data can fuel objective public and consumer appraisals of the performance of all hospitals."

Other measures proposed by the ANA include the following:

• Public hearings should be held before any privatization proposal is approved by a public body, and approval should be contingent on an impact study detailing the effect of privatization on access, affordability, safety, and quality of services.
  
  
• Sale or conversion of nonprofit hospitals, systems, and health plans requires oversight by a public or publicly accountable body or official, and also should be the subject of public hearings. Public oversight should include an evaluation of the impact of the conversion on the community's health, the power to ensure a fair valuation of assets, and the authority to block a sale or conversion in which assets have been undervalued.
  
  
• Assets from a sale or conversion should be used for charitable purposes that relate specifically to the provision of affordable, safe, and quality health care services.
  
  
• In both privatization and for-profit conversions, the rights of nurses and other employees -- including collective bargaining, pay, pension, and seniority should be carefully safeguarded. The effect of privatization, sale, or conversion on employees' rights should be examined in public hearings.
  
  
• Proposed sales or conversions must include full disclosure of all financial arrangements, valuation of assets, and any conflicts of interest, including financial benefit to employees or officers.

The ANA also has gone on record supporting rigorous enforcement of antitrust laws as they apply to hospital mergers and acquisitions. It also has proposed supervision of such transactions by the U.S. Department of Health and Human Services (HHS), a measure also included in the Patient Safety Act, which would empower the HHS to block participation of a merged entity in the Medicare program if it's determined that the merger would adversely impact patients or the community.

The ANA continues to examine the impact of privatization and for-profit conversion. A special forum on the issue will be held at the ANA convention, June 26_July 1, in San Diego, CA. For a copy of the ANA's position statement on privatization and for-profit conversion, call (800) 274-4ANA, or go to http://www.nursingworld.org/readroom/position/practice/prprivat.htm.

David Keepnews is an independent consultant in health policy based in Boston who works with the ANA on regulatory issues.