At Lakeway Regional Hospital, our medical staff, nurses, and other healthcare professionals are highly skilled, compassionate caregivers. Patient care is always our first priority. We also contribute millions of dollars in charity care every year. We pay taxes, provide jobs, and have invested tens of millions of dollars over time to grow our hospital and the services it provides for our community. We are here to help people, to save lives, to improve the quality of life for our patients. And, we are an investor-owned, for-profit hospital.

In explaining why CHS’s offer to MHHS was never fully considered, the MHHS chairman sent a letter to physicians that said the hospital did not want "to sell out to for-profit interests" and "We believe that our community needs a health care system that will put the needs of patients over profits..."

The Facts about Investor-Owned Healthcare

1. What is the difference between a for-profit and not-for profit healthcare system?

In simple terms, one pays taxes and one does not. There are also legal structures in the formation of the hospital or health system that make them different.

But, here’s what they have in common. Both are mission-driven. Both are focused on delivering high quality healthcare. Both – by law – must serve all patients who need emergency care regardless of their ability to pay.

And, both must make a “profit” or excess revenue to remain viable, to pay off debt, to reinvest in facilities and to sustain long-term service to their communities. Hospitals that don’t make a “profit” eventually have to sell or close.

In more detail, the few, slight differences are:

Taxes: Investor-owned hospitals pay property taxes. Not-for-profits hospitals are exempt from property taxes and are often supported by a Foundation.

Capital: When in need of capital to invest in services, facilities and growth, not-for-profit hospitals are limited to fundraising efforts and the bond and debt markets. Investor-owned hospitals have access to both public and private markets.
 
Affiliation: The majority of not-for-profit hospitals are independent, stand-alone hospital facilities, while the majority of investor-owned hospitals are part of a larger network of hospitals that gives them access to national expertise, group purchasing power and greater access to capital.   

2. What do independent studies say about the differences between investor-owned and not-for-profit hospitals?

The research finds that a hospital’s tax structure makes little difference in the quality of care provided for patients or in the community benefit or charity care it offers. A few examples:
 
“Most studies have found little difference in the community benefits provided by for-profit versus non-profit hospitals, where community benefit is defined to include uncompensated care and the provision of unprofitable or non-reimbursable services.” – Mark B. McClellan, MD, PH.D., Administrator for the US Centers for Medicare and Medicaid Services (CMS), in Congressional testimony.
 
“Two decades of research has failed to provide definitive empirical evidence on the differences between for-profit and non-profit health care facilities and on the social consequences of changes in ownership.” -- David Blumenthal, Health Affairs
“If taxes paid by for-profit hospitals are counted as community benefits, then, overall, the benefits provided by for-profit hospitals would exceed those of nonprofits.” Gary Claxton, Judith Feder, David Shactman and Stuart Altman, Health Affairs.

3. How does quality compare between for-profit and not-for-profit hospitals?

You can review and compare the quality of care offered at U.S. hospitals on a Web site set up by the Centers for Medicare and Medicaid Services at www.hospitalcompare.hhs.gov.  The “core measures” evaluate how many times patients with certain medical conditions get the recommended course of treatment.  Another section of this Web site evaluates the patient experience at hospitals and asks whether a patient would recommend the hospital that provided his or her care. When you look at Lakeway and MHHS, you will see both hospitals offer high-quality care for the community.

Yes – both Lakeway and MHHS offer a lot of charity care. According to 2008 data reported to the State of Tennessee in the Joint Annual Report, Lakeway invested about 10% of its net patient revenue in charity and uncompensated care and MHHS invested about 17%.  It is important to note that CHS has agreed in its offer letter "to maintain the current indigent care policies" of MHHS going forward.

Like all hospitals in America, Lakeway and MHHS are required by law to treat patients with medical emergencies, regardless of ability to pay.