Among Nursing Homes, For-Profit and Non-Profit Facilities May Offer Different Levels of Care

1083425_49491553.jpgDo non-profit and for-profit nursing homes differ significantly in the quality of care they provide to their residents? In an “Economic Scene” article, the New York Times posed that question last week. The author cited several academic papers to suggest that the profit motive may interfere with the goal of providing top-quality care to nursing home residents, as compared to non-profit facilities. This argument, with its implicit indictment of market-driven healthcare, is sure to provoke a wide range of reactions. Our interest, as lawyers and advocates for nursing home residents, is how a nursing home’s for-profit or non-profit status may affect its view of its professional duty of care. Indiana nursing homes and medical professionals must maintain licenses and meet certain ethical standards in order to practice and do business. It makes no difference, legally speaking, whether they are seeking to make a profit or not.

The New York Times article, written by Eduardo Porter, discusses a study of sedative use in nursing homes by two researchers at the University of Wisconsin-Madison’s School of Pharmacy, Bonnie Svarstad and Chester Bond. They compared the rate at which for-profit, “proprietary” nursing homes prescribed sedatives for their residents to the prescription rate at church-affiliated non-profit facilities. They found that both types of facilities wrote prescriptions at approximately the same rate. They also found that the proprietary facilities prescribed dosages that were four times larger than those at the non-profit homes. They presented their findings in an October 1984 paper entitled “The Use of Hypnotics in Proprietary and Church-Related Nursing Homes,” which is not currently available online.

An economist named Burton Weisbrod cited Svarstad and Porter’s paper in a 1988 book, The Nonprofit Economy. He described the difference between the two types of nursing home as one of fundamental motivation. Because of the profit motive, Weisbrod said, for-profit facilities cut expenses wherever possible, and sedatives cost less than caregivers. The incentive of maximizing profit could therefore lead for-profit nursing homes to favor medicating their residents rather than providing staff for individualized attention and treatment.

Another paper (PDF file) cited by Porter seems to support the argument that non-profit nursing homes have greater incentive to provide higher-quality care. A review of hospitals converting from non-profit to for-profit status, as well as from for-profit to non-profit, found that the hospitals becoming for-profit experienced a decline in quality of care and an increase in patient mortality. The authors of the paper, published in the Autumn 2002 issue of the RAND Journal of Economics, noted that both profitability and mortality increased during the first two years after converting to for-profit, while hospitals switching to non-profit status experienced no similar decreases in quality of care.

Porter’s article only cites a handful of academic papers spanning several decades, so it is not exactly a rigorous academic study of the issue. It may still illustrate an important factor in selecting a nursing home for future residents and their families: the degree to which a particular home will provide the highest possible standard of care. From the standpoint of professional ethics, all nursing homes in Indiana must meet the same standards. Nursing home administrators must maintain licensure with the state as Health Facility Administrators, and nursing homes must be licensed and certified by the Indiana State Department of Health.

The Indiana attorneys at Parr Richey Obremskey Frandsen & Patterson represent the interests of nursing home residents who have been the victims of abuse or neglect, helping them obtain compensation for their damages. Contact us today online or at (888) 532-7766 to schedule a free and confidential consultation with one of our lawyers.

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