Quality of Hospital Care

Approaches to the appraisal of health care quality generally fall into three broad categories: evaluation of structure, evaluation of process, and evaluation of outcome or end results (Donabedian, 1969:2). Structural indicators include not only physical aspects of facilities and equipment, but also characteristics of the organization and qualifications of its health professionals. Process measures pertain to the activities of health professionals in the care of patients. Outcome measures may be stated in terms of health or in terms of patient or family satisfaction. Quality indicators vary in their comprehensiveness, their importance, their face validity, and their availability in existing data sources.

Evidence regarding the relationship between hospital ownership and quality of care is fragmentary and limited. Ideally, the committee would have liked to examine patient outcome data from carefully matched for-profit and not-for-profit settings, as well as from chain and independent institutions, in order to draw inferences about quality. Unfortunately, the committee had access only to studies using statistical controls and structure and process quality measures, such as hospital accreditation, board certification rates of staff physicians, and perceptions of physicians and hospital board chairmen, as well as some aggregate but nondefinitive pooled outcome data.

Accreditation

Probably the most elemental single indicator of the overall quality of care is voluntary accreditation by the Joint Commission on Accreditation of Hospitals (JCAH). Accreditation is based on the evaluation of reports by site visit teams who assess institutional compliance with more than 2,200 separate standards. Although experts agree that accreditation addresses quality, the process also has its limitations. It is based heavily on structural indicators, although some process indicators are also included. Furthermore, accreditation represents a kind of threshold or minimum baseline, and because of its global nature it does not capture many important differences among institutions. Not all institutions seek accreditation; attitudes about the importance of accreditation vary, in different parts of the country.

The American Hospital Association, in its annual survey of hospitals, collects data on whether hospitals are accredited. A second source of data on JCAH accreditation is from a paper prepared for the committee by Gary Gaumer (1986), using data that had been compiled for a study of state hospital rate-setting programs. The sample of hospitals included all short-term hospitals in 15 states that have prospective payment programs plus a 25 percent random sample of all other U.S. short-term hospitals. Information about full, two-year accreditation and provisional, one-year accreditation was obtained by Gaumer directly from JCAH. Finally, in response to a request from the committee, JCAH itself prepared an analysis of the outcomes of one year's accreditation visits to independent and chain for-profit and not-for-profit hospitals (Longo et al., 1986). This analysis focused not only on accreditation itself but also on ''contingencies" attached by JCAH in its approval of an institution's compliance with particular JCAH standards.

Table 6.1 shows that the highest percentage of accreditation is found among hospitals in investor-owned systems, while the lowest rates are found among the independent investor-owned hospitals and among hospitals owned by state or local governments. There is virtually no difference between investor-owned and not-for-profit chain hospitals. Since much of the past growth of investor-owned chains has been through acquisition of independent for-profit hospitals, the growth of investor-owned systems likely has resulted in the accreditation of a number of hospitals that were not previously accredited.

TABLE 6.1

Rates of JCAH Accreditation, by Type of Hospital, 1983.

Table 6.2 shows the results of the JCAH staffs own analysis, which is consistent with the AHA and Gaumer data shown in Table 6.1. Using data from accreditation visits conducted during the fiscal year ending May 31, 1983, the hospitals that were part of investor-owned chains were most likely to be accredited (and to be accredited without contingencies) and least likely to have failed to pass accreditation. Differences between these investor-owned and not-for profit hospitals were very small and again were in striking contrast to independent for-profit hospitals.

TABLE 6.2

Results of JCAH Accreditation Visits for Fiscal Year Ending May 31, 1983.

Qualifications of Medical Staff

There is some evidence that investor-owned hospitals are less selective in approving physicians for staff privileges.² In a paper prepared for the committee, Morrisey et al. (1986) report data on the percentage of physician-applicants approved in 1981 for privileges in various hospital groupings. They found that hospitals in investor-owned systems approved 89.8 percent of applicants, compared with 81.4 percent in freestanding hospitals (for-profit and not-for-profit combined), 86.8 percent in religiously affiliated system hospitals, 81.4 percent in other not-for-profit systems, and 76.4 percent in con-tract-managed hospitals. (However, the differences among hospitals from investor-owned, religious, and not-for-profit systems were not statistically significant.)

Regarding board certification of staff physicians,³ Morrisey et al. (1986) found no statistically significant differences between investor-owned system hospitals and other types of hospitals in their requirements that at least some specialists be board certified, with approximately 30 percent of the hospitals having such requirements. "Proprietary" hospitals (a term that was used to include both chain and independent for-profit hospitals) have more board-certified medical staff per 100 beds than do "nonproprietary" hospitals (28.8 versus 24.6) (American Medical Association, 1984). However, this is because on average they have more physicians on their medical staffs (49.8 versus 37.3). These data, from the 1982 AHA annual survey, show higher rates of board certification among physicians in nonproprietary hospitals than in proprietary hospitals (66 percent versus 58 percent); this is also true of the specialty groupings compared—general/family practice (41 percent versus 37 percent), medical specialties (68 percent versus 60 percent), surgical specialties (73 percent versus 64 percent), and hospital-based specialties (78 percent versus 69 percent) (American Medical Association, 1984).

These same data, however, were analyzed in a paper prepared for the committee, and it was found that when chain hospitals are separated from independent institutions, the rates of board certification of staff physicians vary little across types of hospitals (Morrisey et al., 1986). The lowest rates of board certification of staff physicians (58 percent) were found in publicly owned system hospitals and in contract-managed hospitals; the highest rates (65 percent) were reported for hospitals in religious systems and in other not-for-profit systems; the rates for hospitals in investor-owned systems and freestanding hospitals of all types were in an intermediate position (61 percent). In a multivariate analysis, only public hospitals were statistically different (lower) from other types of hospitals.

In another paper prepared for the committee (Musacchio et al., 1986), data from a 1984 American Medical Association survey of physicians show that the lowest rates of board certification were among physicians whose primary hospital was owned by an investor-owned system (61.4 percent) and the highest rates were among physicians practicing primarily in not-for-profit hospitals (almost 69 percent), with physicians associated with public hospitals in an intermediate position; however, these differences were not statistically significant. At the committee's request, a table was prepared to display accreditation rates among several specialties. Table 6.3 shows a puzzling and inconsistent pattern: The for-profit chain hospitals show comparatively high rates of board certification among the medical specialties and comparatively low rates among the surgical specialties, including OB/GYN. However, the difference between for-profit and not-for-profit system hospitals was not statistically significant.

TABLE 6.3

Percent of Physicians That Are Board Certified, by Hospital Ownership Status and Selected Specialty, Breakdown, 1984.

Nursing Personnel

If data on the relationship between physicians and quality are sparse, evidence relating quality of care to nursing services is even more meagre. The only available proxy measures are numbers of nursing personnel per patient. Table 6.4 displays data from the 1983 AHA annual survey of hospitals and shows no important differences between investor-owned chain hospitals and not-for-profit hospitals, although both independent for-profit hospitals and state and local government hospitals had lower levels of registered nurses.

TABLE 6.4

Nursing Personnel per 100 Adjusted Census, Short-Term General and Other Special Hospitals, 1983.

Physicians' Evaluations

At the committee's request, the American Medical Association asked the physicians responding to its 1984 core survey to compare their primary hospital with other hospitals that they might be familiar with on four dimensions: the adequacy of nursing support, the responsiveness of the hospital's administration, the level of patient satisfaction, and the adequacy of technical resources and equipment (Musacchio et al., 1986). These data are perceptual in nature, and since they pertain to the hospital where physicians admit most of their patients, the possibility of favorable biases cannot be dismissed. Still, these evaluations from a national probability sample of approximately 3,200 responding physicians are subject to a different set of biases that result from studies based on data provided voluntarily by institutions. No comparable source of data has previously existed.

As shown in Table 6.5, when responses to the four questions are averaged, differences among physicians in not-for-profit and for-profit system hospitals and independent hospitals are small; they are very favorable in comparison to the responses of physicians whose primary hospital is owned by state/ local governments. (Because independent for-profit hospitals are typically owned by physicians, that category possibly includes some evaluations from owners and therefore is not included in this chapter's tables; statistics for these tables appear in Musacchio et al., 1986.)

TABLE 6.5

Physicians' Average Evaluation of Their Primary Hospital on Four Dimensions, 1984.

The averages displayed in Table 6.5 conceal some interesting differences in physician evaluations on the four dimensions studied. Table 6.6 shows physician evaluations of how nursing, hospital administration, patient satisfaction, and technical equipment in their primary hospital compares with other hospitals. The perception of greater administrative responsiveness at investor-owned hospitals is particularly striking; also noteworthy are the less-favor-able evaluations given to for-profit chain hospitals than to not-for-profit hospitals on the other three dimensions: nursing support, patient satisfaction, and technical resources and equipment.

TABLE 6.6

Percent of Physicians Evaluating Their Primary Hospital as Better or Worse Than Other Hospitals with Which They Were Familiar, 1984.

Data from another national AMA survey conducted in 1984 show that 32 percent of physicians believed that not-for-profit hospitals provide better quality of care than do for-profit hospitals, while only 5 percent believed the opposite to be true (Musacchio et al., 1986:Table 11). (The remainder of physicians believed there is no difference or they had no opinion.) Interestingly, of the physicians who had some staff privileges at a for-profit hospital (and data are not available on whether proprietary or investor-owned hospitals are involved), 24 percent believed that not-for-profits provide better quality of care, and 8 percent believed that for-profits provided better care. Musacchio et al. (1986) attribute this difference, at least in part, to the fact that most physicians who perceive a difference in the amount of clinical discretion allowed physicians believe that physicians, have less discretion at for-profit hospitals. Implications for quality are quite unclear.

Board Chairman Evaluations

Another source of perceptions comes from a survey of hospital governing board chairmen that was conducted by Arthur Young for the American Hospital Association's Trustee Magazine in 1983 (Arthur Young, 1983). Table 6.7 shows responses on which board responsibilities were "very important" and which responsibilities were being performed "excellently." Although these are hardly direct or objective measures of institutional quality, the responses of chairmen show some are interesting contrasts in the different types of institutions. In comparison with board chairmen from not-for-profit hospitals, board chairmen from investor-owned hospitals reported comparatively low levels of board involvement in financial and management issues (such decisions are often made at the regional or corporate level in multi-institutional systems) and as much or more concern with issues that bear on quality. This may reflect another finding from the same survey—43 percent of the board chairmen in investor-owned hospitals were physicians, compared with 2-3 percent of chairmen at government, religious, and other not-for-profit hospitals.

TABLE 6.7

Perceptions of Hospital Governing Board Chairmen of Their Own Board's Activities, by Type of Hospital (percent of chairmen giving each response).

Because several studies have provided evidence that greater medical staff participation in governing is associated with higher-quality hospital care (Neuhauser, 1971; Shortell et al., 1976; Shortell and LoGerfo, 1981; Flood et al., 1982; Scott et al., 1979), it is worth noting that investor-owned hospitals have particularly high levels of physician participation in hospital governing (Alexander et al., 1986; Arthur Young, 1983).

These data are discussed at greater length in Chapter 9.

Outcome Measures

Of all the possible measures of quality of care, outcomes are the most important. Ideally, comparisons of quality in for-profit and not-for-profit settings would include standardized case-fatality ratios; rates of such events as intra- and postoperative complications, wound infections, and drug reactions; and unnecessary care. Unfortunately, few such comparisons exist.

The only major attempt at examining the relationship between patient outcomes and investor ownership of hospitals was done for the committee by Gaumer (1986). He examined postoperative mortality (during the hospital stay and within 180 days of discharge) and 90-day post-discharge readmission rates among Medicare patients who had undergone one of eight types of elective surgery between 1974 and 1981.⁴ Gaumer concluded that hospital ownership was not a "strong or consistent influence on post-operative mortality rates," in that significant differences that were found were "not propagated across all procedures categories." For example, proprietary status was associated with lower in-hospital mortality in several cases, but chain affiliation was sometimes associated with higher mortality, and the data on mortality within 180 days after discharge tended to be the reverse of findings for in-hospital mortality. Chain affiliates tended to have higher 90-day readmission rates. Conceding that his study had not been a conclusive test of the quality-of-care question, Gaumer noted the methodological problems that are involved in studying institutional differences in relatively rare events (such as mortality from elective surgery). Even though several years' data from a 25 percent sample of U.S. hospitals were used, only differences larger than 10-12 percent would have been detected by this analysis. However, no pattern of large and persistent ownership differences could be detected for the serious, postsurgical outcomes that Gaumer studied.

The possibility that the profit-seeking orientation might lead to more unnecessary surgery at for-profit hospitals could not be examined directly, but some data are available on Caesarean sections. Although high rates of elective Caesarean sections are considered by some as an indication of excessive surgery, the great professional debate about indicators for elective Caesarean sections makes it difficult to place too much reliance on such rates as a measure of excessive surgery. However, data from the National Hospital Discharge Survey show Caesarean section rates to be higher in "proprietary" hospitals than in governmental hospitals in all four areas of the country examined and higher than voluntary not-for-profit hospitals in three of four areas of the country, as is shown in Table 6.8 (Placek et al., 1983). These data do not distinguish chain from independent hospitals, unfortunately, nor do they control for possible variations in patient characteristics. The analysis of primary Caesarean section rates in California by Williams and Chen (1983) fails to show significant differences by ownership category. These data are also shown in Table 6.8.

TABLE 6.8

Caesarean Section Rates for Nonfederal Short-Stay Hospitals, by Hospital Ownership.

Quality of Care in Nursing Homes

Other than hospitals, nursing homes are the only type of health care providers about which there is literature linking quality-of-care concerns and types of ownership. Although the committee did not focus its attention heavily on nursing homes, because of time and budget constraints and because the problem of nursing home regulation is the subject of another Institute of Medicine study (1986), it did commission an extensive review of the nursing home literature (Hawes and Phillips, 1986).

There are important similarities and differences between hospitals and nursing homes in the United States. Both have early histories as charitable institutions and both have been significantly affected by governmental policies. Since the passage of the Medicare and Medicaid programs in 1965,⁵ both hospitals and nursing homes have witnessed a substantial decline in locally owned proprietary facilities and the development and rapid growth of investor-owned companies that own and manage large numbers of facilities. However, in contrast to hospitals, where the not-for-profit sector has long predominated (and is still more than 80 percent of the total), more than 75 percent of America's nursing homes are proprietary.

Another important difference between the hospital and long-term-care sectors is that while the investor-owned hospital companies developed during an era of generous funding (Medicare's cost-based reimbursement, with most other third-party payers paying charges), prospectively set rates have characterized much of the financing of nursing home care. Thus, hospitals have had fewer financial incentives which might have led them to consider cost reductions that had quality-of-care implications; reductions in nursing home expenses have long translated much more directly into profits, because revenues were substantially based on fixed rates, rather than reimbursement for costs incurred. As Beverly Enterprises Chairman Robert Van Tuyle noted in 1982, because Beverly would serve 60,000,000 meals that year, "every penny saved per meal translates into $600,000" (Los Angeles Times, May 25, 1982).

The presence and influence of medical personnel, particularly physicians, who play an important agency role in hospitals but not in nursing homes—is another difference with important implications. As physician-oriented institutions, hospitals have a long history of genuine self-regulatory activity; nursing home quality has long been seen primarily as a problem of governmental regulation, not of self-regulation. The relatively minor role of physicians in nursing homes also contributes to the comparatively limited role of market forces in the long-term-care sector. Whereas most American hospitals have long had surplus capacity and have vigorously competed for the loyalty of physicians who controlled the flow of patients, nursing home beds in most parts of the country are in very short supply, and physicians tend not to be involved in the referral process or in the day-to-day care of nursing home residents. Because of their physical and mental disabilities and social isolation, and owing to the scarce financial resources of Medicaid patients, many nursing home residents are less able than hospitalized patients to look out for their own interests or to have advocates to do so.

In other words, economic incentives in support of quality of care are less apparent in nursing homes than in hospitals. Except for the relatively few nursing homes whose facilities and prices are aimed at a wealthy clientele, the primary incentives that operate in favor of quality are based either on ethics and community or religious values or on avoidance of regulatory problems. And, nursing home regulation has generally concentrated enforcement on building and fire safety standards rather than on health and patient care standards. All of these factors help to explain the pattern of scandal in the history of American nursing homes, as well as the frequently expressed concern about providers whose motivation lies in economics rather than "religious responsibility or fraternal solidarity" (Vladeck, 1980:126).

Regarding quality of care and type of nursing home ownership, two major limitations of much of the available literature should be noted (Hawes and Phillips, 1986). First, as with hospitals, most studies use resource measures rather than outcome measures and, as such, are subject to methodological dispute and difference of interpretation. Second, and more unfortunate for a study that is oriented toward understanding implications for the future, most studies lump together as "proprietaries" the independent "morn-and-pop" nursing homes that have been on the decline since the very different investor-owned chain facilities have appeared and have been rapidly growing.⁶

To broadly summarize available evidence, most studies on quality (or surrogate measures) of nursing home care tend to favor the not-for-profit mode of organization. This finding holds up across a wide range of measures—amount of patient care staff, expenditures on food, complaints to state regulatory agencies, nonconformity with regulatory requirements, and, in one study, on the following outcome measures: care planning, quarterly review of patients, room conditions, and quality of living environment (Lee, 1984). These studies are summarized in some detail by Hawes and Phillips (1986), who conclude that "the preponderance of evidence suggests the superiority of not-for-profits—particularly of the church-related not-for-profits." Similar conclusions, and an important caveat about variations, were also reached by Vladeck in his book, Unloving Care.

. . . on the average, voluntary facilities are somewhat better than proprietary ones. The worst nursing homes are almost exclusively proprietary. But in the middle ranges, there is substantial overlap. The best way to visualize the difference might be to conceive of the range of quality in each of the two types of nursing homes as a quasi-normal distribution . . . . The two distributions overlap markedly, with the mean for the voluntaries slightly higher than the mean for proprietaries, and with the voluntaries having a shorter low-quality tail (Vladeck, 1980:123).

However, Hawes and Phillips also note that most studies have been flawed in one way or another, and "that the lumping together of various types of not-for-profits (government, church-related, and private) and of independent and chain for-profits may obscure some significant differences in performance." A particular problem in making quality comparisons across the for-profit/not-for-profit line is that not-for-profit nursing homes may have, on average, higher revenues than for-profits. For example, Hawes and Phillips cite Texas data showing that not-for-profits have 19 percent higher revenues (as well as 31 percent higher expenditures) than for-profits. Not-for-profits have a higher percentage of non-Medicaid patients, who in most states pay higher charges than patients covered by the state Medicaid program. Many not-for-profit facilities also benefit from subsidies from their sponsoring organizations (e. g., church or synagogue) or from other sources·

Quality of Care and the Need for Monitoring

Assurance of health care quality has long relied heavily on professional and institutional self-regulatory mechanisms and on monitoring efforts focusing primarily on structural and procedural measures—staff-Lug patterns, requirements for obtaining staff privileges, existence of certain facilities and procedures, and the operation of institutional quality assurance systems. However, as our health care system becomes more competitive and as effects of economic incentives gain recognition, it is becoming more apparent that there is a need to supplement self-regulatory mechanisms and structural indicators of quality with more ongoing monitoring mechanisms that focus on utilization patterns and outcome measures. For Medicare, professional review organizations (PROs) have been assigned this responsibility. Because of concerns about cost control, as well as about quality, insurance companies and large employers are showing increased interest in monitoring patterns of care provided to beneficiaries.

The task is not confined to hospital care. For various reasons, continued expansion of the outpatient and long-term-care sectors seems inevitable. Quality-of-care concerns will increase as these sectors expand and for-profit participation accelerates. These quality-of-care concerns will culminate in a demand for quality monitoring in all settings and under all financing mechanisms.

Data systems already exist or are being developed that will allow monitoring of such things as

• Caesarean section rates
• wound infection rates after surgery
• nosocomial infections
• readmission rates
• complication rates
• fatality rates (with adjustments for diagnoses and severity)
• functional status of nursing home patients
• health status measures in geographic areas.

Because the results of one institution's quality problems may turn up at another institution's door, focusing on events that take place within the walls of particular institutions is not adequate. Thus, it is highly desirable that the monitoring of quality of care be clone by organizations that have access to information about the total health care utilization experience of a population. Data systems are needed that allow linkage of patients' experiences in one institution with subsequent utilization of other institutions; for example, to establish the rates of hospitalization among patients who had undergone a particular surgical procedure in various institutions within the previous six months. For the foreseeable future, the data systems that have the most potential value in monitoring the health care experience of defined populations are connected with payers, including large employers. Several statewide data systems look promising, but they face formidable problems in moving beyond a focus on particular institutions and types of institutions to a focus on populations.

Conclusion

Evidence now available does not support the fear that for-profit health care is incompatible with quality of care, nor the belief that public ownership might provide some assurance of quality. Among hospitals, most available (although rudimentary) measures show that investor-owned hospitals are similar in quality to not-for-profit hospitals, and on some measures they are better. Investor-owned hospitals also appear superior to the type of hospitals they have substantially replaced—independent proprietary hospitals.

However, as with many other topics in this report, the past may not predict the future. Some sources of support for quality care are changing as hospitals find ways to market around physicians (e.g., by selling health care plans directly to employers) and as payment methods are changed to reward institutions for finding ways to cut costs. Although there are many differences from hospitals, evidence from nursing homes is not reassuring regarding how investor-owned institutions win behave if profits require that quality be traded off against cost. Entrepreneural trends that are stimulating the growth of diagnosis and treatment in various types of freestanding centers and through home care organizations,⁷ also raise concerns about quality, particularly since quality assurance mechanisms and standards are less well developed outside of hospitals.

For these reasons, the committee concludes that the monitoring of health care quality, and the research required to increase the sophistication of such monitoring, should be major items on the nation's health policy agenda.⁸ (The need for more resources devoted to long-term care by the public and private sectors is also apparent, but is a subject for another study.) A worthwhile goal is the development of quality assurance systems that would make their results available to the public, although safeguards are needed to avoid unwarranted harm to individual and institutional reputations (e.g., mortality rates for excellent surgeons or institutions would be misleading when their referrals include disproportionate numbers of complicated cases). The publicly funded PRO system is a place where this can begin, although the PRO program (and its PSRO ancestor) has relied to some degree on voluntary participation by physicians, who reflect the long-standing resistance among providers against public disclosure of the results of review activities (Institute of Medicine, 1981).

The possibility of public disclosure of the results of privately funded quality assurance activities is limited by several factors. The Joint Commission for Accreditation of Hospitals is a voluntary organization, funded and controlled by providers who have strong historical attachments to self-regulatory mechanisms in which confidentiality is a hallmark. Also, payers and large employers have little incentive to make public the results of their utilization review and quality assurance activities.

However, if providers fail to respond to information developed through these still embryonic monitoring activities, the threat of public disclosure will undoubtedly come into play. The possibility must also be recognized that institutions that have high standards of care and that are proud of the outcomes of the care they provide may find public relations advantages in making known such facts as how their surgical mortality or readmission rates compare with other institutions' rates.

In sum, if market forces are given increasingly free reign in health care and if cost containment pressures increase, both the interests of patients and the continuing debate over public policy in health care will require an increasing need to monitor the quality of care. Quality should be monitored in all settings, regardless of type of ownership. Although lack of uniform standards for reporting outcomes other than death make the monitoring of outcomes more difficult, research, standard development, and monitoring of other outcomes—infection rates, readmission rates, complication rates, changes in functional status of nursing home patients—are clearly needed. To assess broader changes in the health care system—not only the growth of the for-profit sector, but also of multi-institutional arrangements, new freestanding centers, and vertically integrated organizations, the monitoring of national and regional health status measures is essential. Important health status indices include infant and maternal mortality, mortality of children, and death from potentially controllable diseases (e.g., diabetes and such infectious diseases as tuberculosis).

Formidable methodological, bureaucratic, and political problems are raised by the idea of more monitoring of, and public accountability about, the performance of health care organizations. Yet, the multiple changes taking place in the organization and ethos of health care, as well as in the regulatory and economic environment, should place the monitoring of the performance of health institutions and of the health status of the population high on the public policy agenda and on the agenda of organizations (such as third-party payers) that are in a position to monitor key aspects of institutions' performances.

References

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• American Medical Association (1984) SMS Report 3(June).
• Arrow, Kenneth (1963) Uncertainty and the Welfare Economics of Medical Care. American Economic Review 53(December):941-973.
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• Donabedian, Avedis (1969) A Guide to Medical Care Administration. Vol II: Medical Care Appraisal—Quality and Utilization. Washington, D.C.: American Public Health Association.
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• Flood, A. B., W. R. Scott, W. Ewy, and W. H. Forrest, Jr. (1982) Effectiveness in Professional Organizations: The Impact of Surgeons and Surgical Staff Organization on the Quality of Care in Hospitals. Health Services Research 17(Winter):341-366. [PMC free article: PMC1068694] [PubMed: 7152960]
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Footnotes

1. The theoretical relationship between quality and for-profit/not-for-profit status is complex. Some of the concern about for-profits and quality may result from the sense that the orientation of for-profit organizations is toward markets and marketing, although a marketing orientation increasingly pervades both for-profit and not-for-profit health care. Excessive attention to market factors could affect aspects of quality either positively or negatively. Weisbrod and Schlesinger (1983) observe that in fields characterized by ''asymmetric information" (e.g., the seller knows much more than the buyer), a potential for misrepresentation exists in the form of promises to deliver one level of quality while actually delivering lower, less costly, quality.

When it is difficult for the purchaser to write and enforce contract contingencies against such misrepresentation, consumers seek protective mechanisms such as governmental regulation or devices to limit market entry, of providers who are thought likely to exploit their informational superiority. Weisbrod and Schlesinger hypothesize that proprietary firms are more likely than not-for-profit or public firms to take advantage of an informational superiority. Medical care is a classic example of a service characterized by asymmetric information (Arrow, 1963). However, Weisbrod and Schlesinger (1983) also recognize that patients (or, presumably, their physician-agents) are aware of some aspects of institutional performance, such as the responsiveness of floor nurses, while other aspects are more difficult or costly to monitor. Thus, they hypothesize that proprietary firms will perform as well as or better than not-for-profit firms on "outputs" that can be monitored by consumers, but that they will perform worse than not-for-profit firms on "outputs" that the consumer cannot readily monitor.

The premise that for-profit organizations have greater sensitivity' toward markets also suggests that in competitive markets proprietary, firms will perform as well as or better than not-for-profit firms, but in noncompetitive situations, such as when all facilities are near capacity or when a community has only one provider, they will perform worse than would a not-for-profit institution in similar circumstances.

2. There are also differences between for-profit and not-for-profit hospitals regarding the specialty composition of their medical staff (Musacchio et al., 1986), with for-profit hospitals having fewer internists and more general/family practitioners. Interpretion of this specialty composition in terms of quality must be tempered by several considerations. First, the relationship between specialty composition of staff and institutional quality of care has not been demonstrated. Second, no data are available regarding restrictions on hospital privileges of general/family practitioners (or other specialties) in different types of hospitals. Third, the not-for-profit percentages undoubtedly reflect, in part, that many large teaching hospitals are in this category. In this regard, it is important to note that the data come from a survey of physicians, not of institutions. Because the probability that a particular hospital's staff physicians would appear in the sample is related to the size of its medical staff, the not-for-profit category reflects the influence of very large institutions, of which virtually none are for-profit. Finally, the specialty composition of for-profit hospitals is very similar to public hospitals.

3. Board certification is generally accepted by the medical profession as an indicator of competency at a given time in a professional career. As with all indicators, it must be kept in perspective when judging the overall quality-of-care questions raised in this study. Board certification is conveyed by the 23 specialty boards upon candidates who have completed an accredited training program and then passed a certifying examination.

4. Williams (1979) reports another outcome study, which found that "for-profit" hospital status had a very small, but significant, relationship to perinatal mortality in California. Unfortunately, the data were for 1960-1973, a period that preceded most of the substantial growth of the modern investor-owned hospital companies.

5. However, whereas the federal Medicare program is the most important source of dollars for hospitals, it is the state/federal Medicaid program that has become the single most important financier of nursing home care.

6. A notable exception in a literature that generally does not distinguish between chain and independent proprietary nursing homes are two studies that focused on the single largest nursing home company: "Beverly Enterprises Patient Care Record" and "Beverly Enterprises in Michigan: A Case Study of Corporate Takeover of Health Care Resources." These studies, which were done in 1983 by the Food and Beverage Trades Department of the AFL-CIO and two other AFL-CIO affiliates, both suggest a disturbing pattern of quality-of-care problems in Beverly Enterprises nursing homes with respect to complaints of patient abuse and violations of state regulations. However, because these reports were prepared as part of an innovative "corporate campaign" strategy (English, 1985) to exert pressure on Beverly Enterprises to come to the bargaining table with the unions, the fairness and accuracy of these studies' findings are open to question. Because the committee did not have the time and resources to make its own assessment of the catalog of charges raised by the union against Beverly Enterprises, it chose not to use the information in these reports.

7. Quality of care in ambulatory care settings has not been examined in this chapter because of the absence of studies in which for-profit/not-for-profit comparisons are made. The few existing studies of ambulatory surgery centers are confined to the experience of particular centers. Some studies with quality implications regarding for-profit and not-for-profit hemodialysis centers do exist; however, because of the specialized aspects of that technology and of Medicaid's End Stage Renal Disease Program, the committee decided not to review these studies.

8. Researchers at the Rand Corporation have published a very valuable and detailed research agenda for monitoring the effects of Medicare's prospective payment system on the quality of care (Lohr et al., 1985). Virtually all of the ideas in the Rand report could be usefully applied to studies of ownership-related differences in the quality of care.