Nonprofit Newswire | Cities, Counties Getting Out of the Hospital Business

August 29, 2010; Source: Wall Street Journal |Just when you think the social safety net can’t get shredded any more comes a disturbing report that growing numbers of local governments are ditching publicly run hospitals. According to the Wall Street Journal, governments are getting out of the hospital business because they can’t afford to keep these operations afloat. As the newspaper reports, “More than a fifth of the nation’s 5,000 hospitals are owned by governments and many are drowning in debt caused by rising health-care costs, a spike in uninsured patients, cuts in Medicare and Medicaid and payments on construction bonds sold in fatter times. Because most public hospitals tend to be solo operations, they don’t enjoy the economies of scale, or more generous insurance contracts, which bolster revenue at many larger nonprofit and for-profit systems.” Officials also fear that improvements mandated by the recent passage of the federal health care overhaul will cause them more pain. City and counties are selling or transferring their hospitals to private owners, and that raises concerns about what will happen to people who rely on these hospitals for medical care. Although most deals require that the new owners don’t shed existing services, the Journal notes that “skeptics worry that in the hunt for healthy returns, the for-profits will kill expensive programs and close hospitals with poor revenue.” Mayor David Carey of Peninsula Borough in Alaska is siding with residents who oppose a pending sale of more than 50 percent of a 40-year-old hospital to a for-profit group based in Texas. The mayor is concerned that over time the new owners will shed or shrink services. That would require residents to drive to Anchorage, 150 miles away. Says Carey, “The idea that the hospital could be sold again . . . or even shut down, is unacceptable.”—Bruce Trachtenberg