Nonprofit Hospitals

For-Profit Ventures Pose Access and Capacity Problems Gao ID: HRD-93-124 July 22, 1993

During the 1980s, increasing numbers of hospitals and doctors became partners in for-profit joint ventures, such as outpatient surgery and diagnostic imaging. Concerns have been raised, however, that the profit motive inherent in these joint ventures can lead to excess capacity for some medical services without improving care for poor patients. Further, concerns about kickbacks and other illegal schemes have prompted federal and state regulators to regulate joint ventures more closely. This report determines the (1) rate at which nonprofit hospitals participate in joint ventures; (2) extent to which these ventures, compared with their parent hospitals, serve the poor; (3) extent that joint ventures can boost excess capacity for medical services in their communities; and (4) effect of recent federal and state regulatory action on joint ventures.

GAO found that: (1) the number of nonprofit hospitals participating in joint ventures doubled between 1984 and 1989; (2) nonprofit hospitals participated in joint ventures at the same rate as for-profit hospitals in 1991; (3) the joint ventures surveyed provided substantially less care to poor patients than their parent hospitals; (4) joint ventures can contribute to excess capacity for community health services; and (5) increased scrutiny by federal regulators is the main reason for the recent decline in joint ventures.



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