(ISF) RE: Thought Experiment

Deborah, Theron et al,

So I thought, did some digging, and found two studies:

Title: Quality of care in for-profit and not-for-profit health plans enrolling Medicare beneficiaries.

Source: The American journal of medicine (Am J Med) 2005 Dec; 118(12): 1392-400

Abstract: BACKGROUND: For-profit health plans now enroll the majority of Medicare beneficiaries who select managed care. Prior research has produced conflicting results about whether for-profit health plans provide lower quality of care. OBJECTIVE: The objective was to compare the quality of care delivered by for-profit and not-for-profit health plans using Medicare Health Plan Employer Data and Information Set (HEDIS) clinical measures. RESEARCH DESIGN: This was an observational study comparing HEDIS scores in for-profit and not-for-profit health plans that enrolled Medicare beneficiaries in the United States during 1997. OUTCOME MEASURES: Outcome measures included health plan quality scores on each of 4 clinical services assessed by HEDIS: breast cancer screening, diabetic eye examination, beta-blocker medication after myocardial infarction, and follow-up after hospitalization for mental illness. RESULTS: The quality of care was lower in for-profit health plans than not-for -profit health plans on all 4 of the HEDIS measures we studied (67.5% vs 74.8% for breast cancer screening, 43.7% vs 57.7% for diabetic eye examination, 63.1% vs 75.2% for beta-blocker medication after myocardial infarction, and 42.1% vs 60.4% for follow-up after hospitalization for mental illness). Adjustment for sociodemographic case-mix and health plan characteristics reduced but did not eliminate the differences, which remained statistically significant for 3 of the 4 measures (not beta-blocker medication after myocardial infarction). Different geographic locations of for-profit and not-for-profit health plans did not explain these differences. CONCLUSION: By using standardized performance measures applied in a mandatory measurement program, we found that for-profit health plans provide lower quality of care than not-for-profit health plans. Special efforts to monitor and improve the quality of for-profit health plans may be warranted.

Titleo religious nonprofit and for-profit organizations respond differently to financial incentives? The hospice industry

Source: Journal of Health Economics. Mar 1, 2007. Vol.26, Iss. 2; pg. 342

Abstract: We study how for-profit and religious nonprofit hospices respond to an exogenous Medicare reimbursement incentive that encourages maximization of patient length of stay. Hospices have the incentive to selectively admit patients with longer expected lengths of stay, and admit patients sooner after a hospital discharge. We find that for-profit hospices are significantly less likely to admit patients with shorter, less profitable, expected lengths of stay. We do not find any difference in the timing of admission by ownership. Incentives for efficiency could be strengthened by a Medicare pricing system that replaced the current flat per diem payment with one that reflected the high costs at the beginning and end of hospice stay and the lower costs in between.

Regards,

Dale

Dale Fitch, Ph.D., LMSW
Assistant Professor
University of Michigan
School of Social Work
1080 South University, Rm 2794
Ann Arbor, MI 48109-1106
(734)763-6286
(734)763-3372 (FAX)
dale%40umich.edu">daleumich.edu
http://www.ssw.umich.edu/faculty/profile-dale.html

-----original message-----
>>Suppose there's a nonprofit agency that has had a non-competitive contract with the local government to provide some service, say a Head Start program. The local government puts the next year's contract out for bids, including bids from for-profit organizations. A for-profit organization submits the winning bid. They propose the same levels of service, same service population, same processes, etc. The only difference in the proposal they submit is a lower bid. The next year the facilities are the same, the programs are the same, and the services provided are the same. The question is, does the for-profit enterprise manage the program any differently than the nonprofit enterprise did?How about if the contract award situation had been reversed? The nonprofit organization got the contract away from a for-profit agency. Would the non-profit enterprise manage the program any differently than the for-profit enterprise did.If so, why?>>

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But the thought experiment is about management, not effectiveness.

The questions at the end of the thought experiment are: If a an enterprise changed from for-profit to nonprofit, or vice versa, would it be managed any differently? If so, why?

To give you another thought experiment, suppose there is a for-profit partnership of mental health professionals providing psychotherapy and outpatient drug and alcohol rehabilitation. Their income comes from fees for services and a contract with the local school system to provide testing and evaluation of mentally-retarded students. Now suppose the partners decide to incorporate as a non-profit organization. They will provide exactly the same services. They will seek donations and grants so that they can offer their services on a sliding-scale fee basis. They will recruit volunteers to work in the organization. They will start a free support group for families of persons with dementia. They will work with the local homeless program to increase mental health services for homeless persons.

Will their enterprise be managed any differently?

And suppose after a couple of years the partners decide to go back to a for-profit practice. This time nothing changes but the way they are incorporated. Will their management change?

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