HLTH 385 Lecture Notes - Lecture 15: Induced Demand, Sherman Antitrust Act, Clayton Antitrust Act
21 May 2018
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Changes in healthcare
• Hospitals are getting bigger, physician groups are getting bigger
Why are hospitals not for profit? Is that a good thing?
• Most are owned by cities, counties, or government- only a few are for profit
• What is a not for profit?
o They do not pay corporate income taxes
o Not "owned"
• For profit hospitals are owned by a company or family, or shareholders
(publically traded)
• Self perpetuating board of directors/board of trustees
o Reinvest "profits"
• Any money that they get that exceeds the cost of providing care or
education, they have to reinvest the money back into the company
o Must provide "community" benefits
• Includes: charity care, provision of unprofitable services, research and
education (teaching hospital/university)
• Why are so many hospitals not for profit?
o History- started by religious groups, small organizations
• Originally hospitals were places where people went as a last resort,
weren't made to make money, rather charitable organizations
• Hospitals turned into a business as technology advanced and healthcare
was introduced
o Patients lack information
• not in a good position to asses a quality of care
• non-profit hospitals aren't motivated by profits , more trust from
patients to do the right thing and not just scam them to make money
o Managers like it because they are exempt from slight oversight- no need to
worry about profit, no pressure from board/owners
o Physicians like it
• Non for profit hospitals are reliant on physicians
• Hospitals compete for physicians to compete for patients
• Hospitals get roughly $25 billion dollars, what to consumers get in return?
o Supposed to get community benefits, but not really
• Not for profit hospitals act like for profit hospitals with respect to quality, prices,
and other stuff
Is competition in healthcare good?
• What policies are relevant?
• In most cases more competition= lower prices= greater quantity BUT lower profits?
• Consumers are not paying - insurance companies are paying
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