HANOVER, NH - Medicare costs are higher in areas served by for-profit hospitals than in those served by non-profit hospitals, according to a national study by researchers at Dartmouth and White River Junction (Vermont) Veterans Affairs Medical Center.

The comprehensive analysis, reported in the August 5 New England Journal of Medicine, is the first to examine the association between for-profit hospital ownership and health care spending for the community served, say the investigators. It offers insights for health-care policy and cost containment at a time when more hospitals are converting to for-profit status, they note.

Comparing spending for Medicare beneficiaries over a six-year period, the Dartmouth researchers found that per capita spending was greater and rose faster in areas where for-profit hospitals predominated. Furthermore, spending in areas where hospitals converted to for-profit ownership grew faster than in stable not-for-profit areas.

Authors of the study are Drs. Elaine Silverman, general medicine fellow, and Elliott Fisher, professor of medicine and of community and family medicine, at Dartmouth Medical School (DMS) and the VA Medical Center, and Jonathan Skinner, John French Professor of Economics at Dartmouth College.

"Advocates of for-profit hospitals believe that they are more likely to respond to market forces to produce high quality services at lower costs," says Silverman, also an instructor at DMS.

"Previous work has focused on the costs of individual services. We have examined the impact of hospital ownership on the Medicare population as a whole and found costs in areas of for-profit hospitals higher. There is no evidence that for-profit hospitals provide a higher quality of service.

"Based on our results, if all Medicare enrollees had lived in areas served by not-for-profit hospitals, we estimate that Medicare would have saved over $5 b
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Contact: Hali Wickner
Hali.Wickner@dartmouth.edu
603-650-1520
Dartmouth Medical School
5-Aug-1999