Assignment: Relman’s Claims

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Assignment: Relman’s Claims

Assignment: Relman’s Claims

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Answering Relman’s claims, Bromberg wrote that for-profit hospitals provided capital that funded a technology boom; that for-profit hospitals paid significant taxes that supported social programs at the local, state, and federal levels; and that for-profit hospi- tals competed with not-for-profit hospitals, which would be good for the community by reducing costs and improving quality. Bromberg also criticized some of the early research that seemed to support Relman’s claim. This research found that for-profit hospitals charge more per patient day; perform more ancillary tests per patient day; and “skim the cream,” meaning that for-profit hospitals serve only paying patients and provide only profitable services (Bromberg 1983).

This issue has been studied many times since the Relman–Bromberg discussion. In 1987, an article in the Harvard Business Review found that little difference existed between community benefit provided by hospitals in for-profit systems and those provided by hos- pitals in not-for-profit systems.

Subsequent to the Herzlinger and Krasker study in 1987, Witek, Milligan, and Ryan (1993) reported that if taxes could be included in the definition of community benefit (local taxes are used for schools and roads), then for-profit hospitals might actually provide more community benefit than not-for-profit hospitals or county hospitals that receive direct tax support.

In mid-2004, Richard Scruggs, an attorney who had successfully won billions of dol- lars in class-action lawsuits against asbestos manufacturers and the tobacco industry, began to seek class-action status in 49 lawsuits accusing 370 not-for-profit hospitals of overcharging the uninsured and using aggressive collection methods against poor patients. The lawsuit against the Providence Health System, which operates several hospitals in Washington and Oregon, is representative. Citing the Providence mission to provide “universal access to health care, social justice and compassion for all members of our society” with “special concern for the poor and vulnerable,” Scruggs (2004) argued the following:

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