Profit Potential: Revisiting New York’s Restrictive Hospital Ownership Laws

This NYHealth-funded report by the Empire Center for Public Policy provides an analysis on whether New York State’s hospital ownership laws should be changed to allow for shareholder-owned, for-profit ownership.

New York is one of four states that prohibits for-profit hospitals owned by publicly traded companies from operating in the market. Over the past seven years, New York State lawmakers have debated changing or eliminating the prohibition on for-profit hospitals. Proponents believe that allowing for-profit hospitals to operate within the State would alleviate the chronic shortage of capital funding for hospitals and bring competition and efficiency to the market. Opponents hold that for-profit hospitals focus too much on short-term profits and weaken institutions serving the poor and other marginalized groups.

The report finds that there is no evidence that ownership restrictions have produced a public benefit in terms of the quality, cost, or accessibility of hospital care. New York’s hospitals are characterized by lower quality scores, higher spending, and more economic segregation than their national peers. However, changing ownership laws alone would not be enough to fully address the issues of quality, financial condition, and access facing New York’s hospitals—which deserve further exploration. The report suggests that the potential benefits of allowing for-profit investment in hospitals would outweigh the potential risks.