Who owns American Hospitals? | And are they coming over here?

Barely a week goes by without someone telling me about another imminent threat from the Tories to privatise the NHS, and introduce American style healthcare.

As you might have spotted after 30 years of these stories I am pretty sceptical. The NHS is still as it ever was.

I do understand people’s anxieties. Hospitals that operate for profit are one of the features of the American health system that most worry people in the UK. Concerns that this model might be imported into the UK drives endless campaigns against the threat of the arrival of US healthcare models to the UK, even if the threat is hugely overstated.

Which raises an obvious question – what is happening to US for-profit hospitals? Are they really coming to the UK any time soon?

The US has always had for-profit hospitals – historically the majority of American hospitals were privately run for profit, mostly as independent businesses. From the 1940s not for profit hospitals started to increase across the US, initially ran by religious groups, and later secular charities. In 1940 there were 183 religious not for profit hospitals, and 35 secular. By the 1980s there were 600 religious charity owned hospitals and 383 secular.

Since the 1980s the trend has been for smaller independent private hospitals to be absorbed into larger chains of hospitals owned by large investors. These chains operate across the US but are more prevalent in “Sun Belt” states with lots of older residents.

At the same time since the 80s the share of the US healthcare hospital market controlled by for profit hospitals has been in sharp decline while not for profit hospitals have expanded. The federal Government has always operated their own network of publicly owned hospitals, mainly through the veterans healthcare administration. Increasingly over the last decades States have started to own their own hospitals, stepping in where for profit providers have failed.

Right now more than half of US hospitals are run not for profit, for-profit comprise just over a quarter, and the rest are publicly owned – state or federal.

The UK has for-profit hospitals too, but the majority of UK hospitals are run and owned by the NHS. The UK has roughly 1250 hospitals, a third of them private (for-profit) and the rest owned by the NHS. There are a tiny number of not for profit charitable hospitals.

The UK therefore has a greater percentage of for-profit hospitals than the US, and has done for some time. The significant difference is that the NHS hospitals are so much larger than their private sector for-profit equivalents, therefore 90%+ of hospitals beds are state owned. This is because for-profit hospitals in the UK only provide a limited range of elective treatments like planned operations. They don’t provide complex or emergency care.

This reflects the financial dynamics of for-profit healthcare -it’s incredibly hard to make a profit on A&E/ER and urgent care; patients are sick, care can’t be planned, workload is unpredictable and departments needs lots of staffing. Instead they make their profits on planned care; selling lots of diagnostic tests and operations to wealthy, less sick patients. This care can be planned and can operate efficiently.

The last few years have been a catastrophe for-profit based hospitals in the US – lots of sick patients have flooded emergency rooms with Covid, while richer, less sick patients have stayed at home and avoided elective treatments. For-profit hospitals across the US are in huge financial trouble, and this isn’t going to change any time soon. In the UK their equivalent private hospitals have effectively been temporarily nationalised – take over by the NHS to deal with the huge demand for healthcare during the Covid crisis.

In fact the US healthcare system is becoming more and more like the UK, not the other way round. The US has a socialised healthcare system, and has had long before Obamacare – roughly 2/3rds of US healthcare spend comes from the state, compared to 85% in the UK. In cash terms the US Government spends more pre head of population on healthcare than all comparable healthcare systems.

Government control of hospitals has declined slightly over recent years, but I predict that by the time Biden leaves power publicly owned hospitals will outnumber for profit hospitals due to the financial shock of Covid. The US is moving closer to a European model of state funded healthcare, with a mix of provider organisations mostly operating on a not for profit basis.

There is still a very long way to go for the US on healthcare, it still spends more than any other country in the world, but gets less for it in terms of mortality and morbidity than any developed nation. It’s cost base is too high, it is addicted to prescription medication, and the dysfunctional insurance market means that transaction costs are twice as high as any other healthcare system.

But it is going in the right direction.

There is little appetite among US for-profit healthcare providers to take over NHS hospitals for the same reason they are in decline at home – it is hard to get the financial returns that investors want by running hospitals providing urgent care. They are desperate for cash to keep themselves liquid and have no surplus cash to spend on expanding into the UK.

There will be a short term increase in the use of private for-profit hospitals in the UK over the next couple of years to deal with the backlog that built up during Covid. But the long term picture is less outsourcing, and less privatisation in the UK. And a move away from for-profit hospitals in the US.

That doesn’t mean that there is nothing to worry about. The NHS is entering the worse crisis in it’s history. This has nothing to do with Tory privatisation, and everything to do with staffing. The NHS has too few staff, too many vacancies. Too much burn out, and low morale. Social care is worse. We should have tackled those problems a year or 2 back, but didn’t.

This is the real crisis we should be talking about. Not phantom privatisations.

Number of Nongovernment Not-for-Profit Hospitals2,9462937296828492845
Number of Investor-Owned (For-Profit) Hospitals1,2331296132213351334
Number of State and Local Government Hospitals962965972956983
Federal government Hospitals 208209208209212


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