Targetting Public Hospitals

As the health care marketplace is restructured, public hospitals around the country are exploring changes that will enable them to compete for patients and survive, often ending direct operation by the state or local government. Money, access to capital, survival or simply frustration with today's chaotic environment have all prompted changes in a public hospital's status.

Some arguments for changing the legal governance of public hospitals, or merging or closing public hospitals, are based in the reality of the changes now sweeping the health care delivery system and the consequent needs of public hospitals to adjust. For example, those advocating the conversion of public hospital governance often argue that rigid purchasing and personnel regulations make it hard for public hospitals to respond effectively to the rapid changes that are occurring in health care today. They say that public sector requirements concerning financing and budgets make it more difficult for public hospitals to become or remain economically competitive in the face of the growing dominance of managed care, especially as managed care increasingly characterizes Medicaid as well as the commercial market. They talk about inflexibility, limited access to the capital market, and the competitive disadvantages of having, as a public entity, to conduct strategic planning in the public eye.

In any given situation, some of these claims may be true — when this is so, they are ignored at our long-term peril. Thus, in assessing how to respond to restructuring proposals, it is desirable to do a candid assessment of the strengths and weaknesses of the hospitals. Development of a union proposal to address any weaknesses which might exist may give the union the high ground from which to argue against changes in status that would disadvantage union members.

In the current health care marketplace, a change in ownership status does not ensure competitiveness for hospitals with a mission to provide services that are high-cost, such as open emergency room, trauma and burn units. Some hospitals will still face problems as the result of a deteriorating physical plant, lack of capital, their location and a sicker patient population.