Privatization of Public Hospitals in the U.S

Vladimiras Obrazcovas


The article analyses the issues involved in the privatization of public hospitals in the U. S. Faced with increasing costs, many public hospitals are bleeding red ink and thus encounter difficulties when making investments necessary to cut costs and increase performance. Hospital expenditures accounted for almost a third of the $1.6 trillion the United States spent on health care in 2000. According to the U.S. Department of Health and Human Services, over the ten-year period from 1990 to 2000 the average cost of an inpatient stay at a public hospital increased by nearly 50 percent, compared to only 20 per cent at private for-profit hospitals. By 2001 the $7,400 cost of a stay at a public hospital was 24 per cent greater than at a private for-profit ($5,972). In the case of public hospitals, a conflicting mix of social, political, and business objectives results in weak incentives to control costs. Cost burdens come from inefficient accounting, restrictive government personnel and procurement regulations, a tangled web of bureaucracy, and a general lack of accountability. Most public hospitals lack the strategic advantages enjoyed by private hospitals including: a marketing orientation, volume purchasing systems, state-of-the-art information systems, standardization of supplies, outcome management systems, computerized case management systems with cost-per-procedure variables among physicians performing the same procedures, physician practice management, and technologically advanced patient care.


public hospitals; privatisation; state and municipal property

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"Public Policy and Administration" ISSN online 2029-2872 / ISSN print 1648-2603