New dawn for not-for-profit providers

Many persons expect large for-profit hospital corporations, the "multis," to dominate the provision of health care in the future. Failing profits and uncertainty about hospital payments, however, have eroded investor confidence in the multis, inhibiting the flow of capital to these organizations and thus their expansion. Not-for-profits, scrambling to compete, have formed cooperative ventures, which reduce costs and improve their access to capital. Hospital profits have been curtailed by the DRG system and prepaid plans have cut insurance payments and reduced utilization. Although both not-for-profits and proprietaries need profits to survive, not-for-profits may need only a surplus sufficient to replace assets, whereas proprietaries must also pay taxes and investors' dividends. Thus, not-for-profits may face the future with confidence in their ability to compete with the multis and survive.