SAN FRANCISCO, California, November 13, 2000–Numerous mergers and acquisitions by hospital systems in California have created a market that is dominated by major multihospital firms, according to a Public Policy Institute of California study appearing in the November/December 2000 edition of Health Affairs.
In The Growth of Multihospital Firms in California, Joanne Spetz, Shannon Mitchell, and Jean Ann Seago find that the state’s hospital industry has changed dramatically since the late 1980s. The authors identified 322 hospital ownership changes in the state between 1986 and 1997. Many of these changes were the result of mergers or acquisitions by major hospital systems, resulting in a consolidation of the industry. For example, the analysis reveals that the three largest hospital systems in Sacramento–Sutter Health, Catholic Healthcare West (CHW), and Kaiser Foundation Hospitals–now control over 83 percent of the hospitals in the region. In San Diego, two-thirds of the hospital beds are managed by the three largest local firms–Sharp Healthcare, Scripps Health, and Palomar Pomerado Health System.
Although policymakers, the public, and the media have focused considerable attention on the conversion of nonprofit hospitals to for-profit status, the authors found little evidence of a trend toward for-profit ownership. Indeed, nonprofit to for-profit conversions occurred only 15 times during the 12 years studied. Over the same period, 14 hospitals switched from for-profit to nonprofit status. Overall, about 80 percent of hospital ownership changes in California did not involve a change in profit status.
“The financial pressures that are driving mergers among California hospitals are not likely to ease in the near future,” says PPIC research fellow Joanne Spetz. “We expect these large systems to continue to grow. A key question we must address is what affect, if any, this consolidation of hospital ownership is having on quality of patient care or access to care.”
To request additional copies of this article, please call or email Christina Danford at Health Affairs (301/656-7401, ext. 255, or cdanford@projecthope.org). For additional information on the changing face of California’s hospital industry, visit PPIC’s web site (www.ppic.org) or call Abby Cook (415/291-4436) to request a copy of Changes in Hospital Ownership in California (Spetz et al., 1999).
PPIC is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett.