Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis
P.J. Devereaux, Diane Heels-Ansdell, Christina Lacchetti, Ted Haines, Karen E.A. Burns, Deborah J. Cook, Nikila Ravindran, S.D. Walter, Heather McDonald, Samuel B. Stone, Rakesh Patel, Mohit Bhandari, Holger J. Schünemann, Peter T.-L. Choi, Ahmed M. Bayoumi, John N. Lavis, Terrence Sullivan, Greg Stoddart and Gordon H. Guyatt
CMAJ June 08, 2004 170 (12) 1817-1824; DOI: https://doi.org/10.1503/cmaj.1040722
P.J. Devereaux
Diane Heels-Ansdell
Christina Lacchetti
Ted Haines
Karen E.A. Burns
Deborah J. Cook
Nikila Ravindran
S.D. Walter
Samuel B. Stone
Rakesh Patel
Mohit Bhandari
Holger J. Schünemann
Peter T.-L. Choi
Ahmed M. Bayoumi
John N. Lavis
Terrence Sullivan
Greg Stoddart
Gordon H. Guyatt
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HIGHER PAYMENT FOR CARE AT PRIVATE FOR-PROFIT HOSPITALS
WillIam M Nuttley
Paper ignores corporate taxes, competition and case mix in assessing for-profit hospital costs
Vincent V. Richman
Published on: (2 July 2004)
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Dr. Nuttley raises the issue of conflict of interest related to the fact that one of the authors (Dr. Gordon Guyatt) was a candidate for the New Democratic Party in the federal election. The choice of our research question was undoubtedly one of people's interests and values, but that is true of all investigators and all projects.(1) This work was conducted before Dr. Guyatt was nominated as a political candidate in thi...
Dr. Nuttley raises the issue of conflict of interest related to the fact that one of the authors (Dr. Gordon Guyatt) was a candidate for the New Democratic Party in the federal election. The choice of our research question was undoubtedly one of people's interests and values, but that is true of all investigators and all projects.(1) This work was conducted before Dr. Guyatt was nominated as a political candidate in this election. The researchers on our study team hold widely varying political views, but they shared a common conviction that the study question was crucial to answer (regardless of the results), given the active debate about the future of Canadian health care. Knowing a priori that some people would not like whatever our systematic review would uncover, we used several measures to minimize any possible bias. For example, we established explicit eligibility criteria and blacked out all study results prior to determining study eligibility so that we were unable to select or reject an article based on the study results. Therefore, we did not, and indeed could not, select studies to reach a pre-conceived conclusion.
Based on the results of our systematic review that demonstrated a statistically significant relative increase in payment for care of 19% at private for-profit compared to private not-for-profit hospitals, we indicated that if we were to convert half of our Canadian hospitals to private for-profit institutions we would pay approximately an extra $3.6 billion annually.(2) Dr. Richman states the, "combined federal and provincial corporate income tax rate is estimated to be 37.7% in Canada for 2004," and therefore, "for-profit hospitals would have to pay $1.36 billion (37.7% X $3.6 billion) in corporate income taxes." Even if corporations were to actually pay all this income tax and this tax money was re-invested into health care this would still leave Canadians paying an extra $2.2 billion annually for health care.
Dr. Richman states, "Devereaux et al. ignore the effect of competition in moderating prices." The 3 studies included in our meta- analysis that controlled for market competition, however, all demonstrated statistically significant higher payment for care at private for-profit hospitals.(3-5) Further, a health care system can still have competition without private for-profit hospitals, as exists in many cities with several private not-for-profit hospitals.
Dr. Richman claims we ignore case mix by extrapolating our pooled estimate of a mix of hospital payment ratios to the entire Canadian hospital system. We acknowledge that our $3.6 billion annual excess expenditure is an estimate that assumes we share a relatively similar case mix to American hospitals. Even if Dr. Richman wants to assume a lower acuity case mix among Canadian patients any realistic assumption will result in the Canadian public having to pay billions of dollars in excess expenditures if we introduce private for-profit hospitals. Considering this reality and given our previous finding of higher death rates in the private for-profit hospitals,(6) our policy recommendation remains robust (i.e. the evidence strongly supports a policy of not-for-profit health care delivery at the hospital level).
P.J. Devereaux, Greg Stoddart, Deborah J. Cook, Ahmed M. Bayoumi, Ted Haines, Karen E.A. Burns, Mohit Bhandari, Holger J. Schünemann, Diane Heels-Ansdell, Christina Lacchetti, Nikila Ravindran, S.D. Walter, Heather McDonald, John N. Lavis, Terrence Sullivan, Peter T-L Choi, Samuel B. Stone, Rakesh Patel, Gordon H. Guyatt
1.	Unwanted results: the ethics of controversial research. CMAJ 2003;169(2):93.
2.	Devereaux PJ, Heels-Ansdell D, Lacchetti C, Haines T, Burns KE, Cook DJ, et al. Payments for care at private for-profit and private not- for-profit hospitals: a systematic review and meta-analysis. CMAJ 2004;170(12):1817-24.
3.	McCue MJ, Clement JP. Relative performance of for-profit psychiatric hospitals in investor-owned systems and nonprofit psychiatric hospitals. Am J Psychiatry 1993;150(1):77-82.
4.	Sloan FA, Picone GA, Taylor DH, Chou SY. Hospital ownership and cost and quality of care: is there a dime's worth of difference? J Health Econ 2001;20(1):1-21.
5.	Keeler EB, Melnick G, Zwanziger J. The changing effects of competition on non-profit and for-profit hospital pricing behavior. J Health Econ 1999;18(1):69-86.
6.	Devereaux PJ, Choi PT, Lacchetti C, Weaver B, Schunemann HJ, Haines T, et al. A systematic review and meta-analysis of studies comparing mortality rates of private for-profit and private not-for-profit hospitals. CMAJ 2002;166(11):1399-406.
Dr. Gordon Guyatt was a candidate for the New Democratic Party in the federal election
Published on: (16 June 2004)
I was surprised to learn that, Gordon Guyatt, the senior author of an influential paper on health care delivery (CMAJ 170;12) is also a candidate for the NDP party. The statement in the article claiming that there was no conflict of interest is as shocking as it is false. At the very least, medical studies authored by politicians should be transparent about that fact.
None dec...
Devereaux et al. (1) estimate the cost of hospital privatization. Unfortunately, they ignore the following three points.
First, Devereaux et al. ignore corporate income taxes. They estimate that for-profit hospital care would cost an additional $3.6 billion. This additional $3.6 billion would either be spent on improved care (greater capacity, shorter waiting times, newer technology), other hospital expenses o...
First, Devereaux et al. ignore corporate income taxes. They estimate that for-profit hospital care would cost an additional $3.6 billion. This additional $3.6 billion would either be spent on improved care (greater capacity, shorter waiting times, newer technology), other hospital expenses or it would become "profit" before taxes. The average combined federal and provincial corporate income tax rate (2) is estimated to be 37.7% in Canada for 2004. If none of the additional $3.6 billion were spent on additional hospital expenses then the for-profit hospitals would have to pay $1.36 billion (37.7% X $3.6 billion) in corporate income taxes. This would reduce the impact on taxpayers.
Secondly, the role of competition is ignored. The study (3) with the most recent data (1986-1994) and the most patients, found that lack of competition leads to higher prices, even for non-profit hospitals. Devereaux et al. ignore the effect of competition in moderating prices.
Thirdly, Devereaux et al. ignore case mix. The authors extrapolate one pooled estimate of a congeries of hospital payment ratios to the entire Canadian hospital system.
I am sure that consideration of the above points substantially alters the policy recommendations that were derived from the meta-analysis.
Vincent V. Richman, MBA PhD, Associate Professor of Accounting, Sonoma State University, Rohnert Park, California, United States.
(1) Devereaux PJ, Heels-Ansdell D, Lacchetti C, Haines T, Burns KEA, Cook DJ, et al. Payments for care at private for-profit and private not- for-profit hospitals: a systematic review and meta-analysis. CMAJ 2004;170(12):1817-24.
(2) Government of Canada. Low Corporate Taxes: Tax Advantages for Firms Expanding in Canada. http://investincanada.gc.ca/ipc/cms/browse?IPC_Lang=e&IPC_PageAction=viewWebPage&IPC_BranchID=55 2004 April 21.
(3) Keeler EB, Melnick G, Zwanziger J. The changing effects of competition on non-profit and for-profit hospital pricing behavior. J Health Econ 1999;18(1):69-86.
You are going to email the following Payments for care at private for-profit and private not-for-profit hospitals: a systematic review and meta-analysis
P.J. Devereaux, Diane Heels-Ansdell, Christina Lacchetti, Ted Haines, Karen E.A. Burns, Deborah J. Cook, Nikila Ravindran, S.D. Walter, Heather McDonald, Samuel B. Stone, Rakesh Patel, Mohit Bhandari, Holger J. Schünemann, Peter T.-L. Choi, Ahmed M. Bayoumi, John N. Lavis, Terrence Sullivan, Greg Stoddart, Gordon H. Guyatt
CMAJ Jun 2004, 170 (12) 1817-1824; DOI: 10.1503/cmaj.1040722
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