Public hospitals seen slipping away, changing into other entities

A new study using American Hospital Assn. data has found that the number of public hospitals is falling at a faster rate than other facilities.

Between 1996 and 2002, the number of public hospitals decreased by 16% in the nation's largest 100 cities and 27% in those cities' suburbs. Those 100 cities had 645 facilities in 2002, down from 730 in 1996, while in the suburbs the drop was to 98 from 134. Meanwhile, the number of for-profit hospitals fell by 11% in cities and 11% in suburbs. Nonprofit hospitals lost 11% in cities and 2% in the suburbs.

The numbers were released Aug. 17 in a report by the State University of New York Downstate Medical Center.

"The classic public hospital is declining," said Dennis Andrulis, PhD, lead author of the study and director of the Center for Health Equality at the Drexel University School of Public Health in Philadelphia.

However, the hospitals, in most cases, weren't shutting down completely. Dr. Andrulis said the data showed that while some public hospitals closed, others were simply transformed into different kinds of entities.

"Some local governments are taking action to position what were previously public hospitals -- position them more positively -- to survive in a more competitive market-driven environment while still maintaining their safety net," he said, citing Boston Medical Center as an example.

The National Assn. of Public Hospitals and Health Systems has record of only two public hospitals closing in approximately the last 10 years, said Skip Moskey, an assistant vice president. However, the organization has seen a trend of ownership structures changing in recent years.

"There's a longstanding trend of hospitals moving away from operating as purely public -- as a department of city, county or state," said Robert Falk, a Washington attorney whose firm, Powell Goldstein LLP, represents the hospital association.

Instead, those hospitals may be shifting to straight nonprofit structures, privatizing or even changing into a different type of public entity while, in many cases, maintaining at least part of the safety net mission.

"They may consider restructuring so they operate as a more autonomous entity, or they may get some relief from civil service laws," he said, adding that all sorts of reasons could factor into a hospital's decision to change its ownership structure.

The report comes as local governments appear to be taking increasingly drastic steps to protect public hospitals from encroaching competition, citing the need to fight for such services for their constituents. In Indiana, at least four counties have recently enacted moratoriums to halt new hospital construction.

Moskey pointed out that some hospitals have gone to the polls, asking voters for special referendums and taxation districts to help pay to keep safety-net services in the community.

Falk said such battles go beyond public hospitals, affecting other competing health care facilities. "That concern is not just the concern of the public hospitals but also the community hospitals, which provide a broad range of services," he said.

Another strategy to keep safety nets intact has been to regionalize responsibilities, said Dr. Andrulis. That may entail a number of hospitals and clinics working together to plan for community needs.

A significant need for that type of planning may be found in suburban areas, where Dr. Andrulis said public hospitals have declined "almost precipitously" since the early 1980s.

In particular, high-poverty suburban areas are showing signs that they are underserved. Among the metropolitan areas of the largest 100 cities, high-poverty suburbs made up 44% of the total suburban population in 2000, yet they accounted for only about one-fifth of the total admissions, inpatient days and outpatient emergency visits in 2002, the study found.