Privatization of Teaching Hospitals

Some medical centers may be considering selling their teaching hospitals to for-profit chains of healthcare providers. This could have either a positive or negative impact on the overall healthcare market. The possible consequences could be catastrophic or could be a solution to some of our serious, endemic problems with our medical industry.

The positive prospects are numerous; it could result in a greater quantity of doctors being brought in for patient care, a McDonaldsization (if you will) of the medical residency programs. For-profits have a greater incentive and ability to get more H1B work visas for medical residents (the lower cost alternative to full-fledged physicians). This will result in the likelihood of the doctor staying on with the organization after completion of residency and additional doctors in the system, and building up a vertical integration of training for medical professionals. The for-profit mission of this type of activity incentivizes more physicians, and should (with enough market competition) result in lower pricing.

The negative prospects are also numerous; without enough market competition, it could result in increased costs to patients, with the residents charging a market rate more equivalent to full-fledged physicians, further straining an already weak economy. They could also reduce the research mission of the organization, due to long-term costs associated with research as a whole. Not-for-profits and educational institutions have a greater advantage in this field because their goal is not to result in profit making from the research itself, but to fund itself through tuition and fees, and grants.

I cannot see service being affected by the change of the formula from educational institution or not-for-profit to for-profit institution; the political ramifications of doing such a thing, at least in the short-term, would be harmful. If there was reduction in service, it would likely be a greater refusal to take cases that may be overly costly. The political fallout of taking such a position would be negative to the bottom line of the company as well, and they would likely know this. Over the long term, a shift to lower standard of care is likely, but not likely in the near term.

As you can see, there are arguments on both sides of this, and the most likely outcome is negative. It should be stated that the mission of the medical industry should not be to make a profit; it should be to care for patients, regardless of amount of money made. Therefore, the for-profit model, unless it is likely to provide better outcomes for society as a whole – and in this case it is not – should not be utilized. There are more efficient ways to result in greater gains.