Published in the Wall Street Journal, Thursday, May 29, 1997, page B6.

Hoping to improve its position in a protracted lobbying battle, the main for-profit hospital association released a study showing big efficiency gains when its members acquire not-for-profit hospitals.

The $412,000 study, commisioned by the Federation of American Health Systems, covers 87 acquired hospitals that converted to for-profit status from 1987 to 1995. Project Hope, a Bethesda, Md., health-research group that conducted the study, examined eight of those conversions in more detail.

Profit margins at acquired hospitals improved as much as 20 percentage points after new for-profit owners took over, Project Hope reported. In many cases, hospital staffing was reduced to industry norms, after periods of higher-than-usual staffing. Employee morale declined at some acquired hospitals, Project Hope analysts found, but they didn't discern a clear trend up or down in hospitals' care provided to nonpaying patients.

The Project Hope study comes on the heels of other studies, released by not-for-profit hospital groups, that paint a dimmer view of such acquisitions. In the past few years, acquisitions of not-for-profit hospitals by for-profit chains have become increasingly common, and controversial. The competing studies are likely to used as ammunition by various health-care lobbying groups seeking regulatory changes that would make such transactions either easier or harder to complete.

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