Selling Salvation: Catholic Hospitals in the Healthcare Marketplace
Daughters of Charity holy card. 1896. University of Dayton Libraries / Wikimedia Commons.
My mother spent 25 years working for a Catholic hospital in Nashville, Tennessee. When she was hired in 1984, Catholic faith was a requirement for management, and nuns roamed the halls. For every five years of service, she received a new metal Holy Cross pin, which she attached to a plastic badge declaring the ideals of Saint Thomas: Service to the poor, reverence, integrity, wisdom, creativity, and dedication, all “rooted in the loving ministry of Jesus as healer.” When she retired in 2016, her hospital was almost unrecognizable. It boasted the same values, but management was predominantly secular. The few nuns remaining wore understated uniforms, not habits. The hospital corporation had purchased four other hospitals in the Nashville region, and was itself partially owned by a nationwide Catholic hospital corporation, Ascension Health.
My mother never understood, or liked, the transformation she saw in her hospital. Though she was not a religious person, she mourned the management’s shift away from charity and empathy, and feared that the hospital was selling Catholicism, not practicing it. I have often thought about my mother and the transition of her hospital. It seems to suggest that religious and charitable ideals are incompatible with economic success. In an increasingly business-oriented healthcare market, can religion remain a driving force? I argue that Catholic hospitals have proven to be formidable competitors in the healthcare marketplace, due to their highly integrated nature, but that their financial success seems to have shifted their focus away from charity.
Our Hospitals have Religious Roots
The first hospitals in the United States were nothing like the institutions we have today. They were charitable organizations, providing free care to the very poor. Caretakers in these facilities generally did not have the capacity to save lives, and so instead focused on providing compassionate care to those who had nowhere else to go. Physicians volunteered to work there, as a form of training. The Catholic Church had a strong hand in these organizations. Many hospitals were owned by nuns, and many of the first nurses were nuns.
By the end of the 1800’s, however, the role of the hospital began to change. Aseptic surgical techniques (which prevent infection) and anesthesia (which allows for longer, more complex procedures) had been discovered. Physicians were suddenly able to treat acutely ill patients with surgery—a treatment which in the past had been as likely to kill the patient as the original illness. These techniques required more preparation than could be done in an individual’s home, and so hospitals became a center for treatment and salvation, rather than just a place to die comfortably. Demand for these facilities strained their resources, and so they began charging for services. By the mid 1900’s, it was clear that hospitals could be a source of profit. These forces, combined with changing insurance coverage and federal policies, shifted hospitals into the realm of “business.”1This shift is discussed in great detail in The Social Transformation of American Medicine.
Throughout this shift, Catholic hospitals tried to remain true to their charitable missions and religious ideals. Nuns continued owning their hospitals and remained on the boards as the hospitals expanded and changed. At the same time, radical changes in the Catholic church, reduced the available number of nuns and brothers to staff hospitals and run boards. Hospitals were forced to allow lay people into management and affiliated nursing schools. As healthcare grew more expensive, this challenge grew more difficult. By the 1980s, some Catholic hospitals were forced to close by financial insolvency.2Wall (2011) provides a compelling and detailed history of this shift.
Despite early struggles, Catholic hospitals have a substantial share of the market today: the official Catholic Health Association website claims that one out of every seven patients is cared for by a Catholic hospital each day. How could this have occurred? In the following section, I explore how Catholic hospitals have managed to achieve success.
The Hospital Market Today
Hospitals are major corporations. They compete for revenue, try to drive down costs, and advertise their services. They employ thousands of people—in many states, a hospital system is the largest employer. Unlike other businesses, however, they contend with extensive outside regulation and quality standards. They must negotiate with large insurance companies, drug companies, and the U.S. federal government to set service pricing. Though our healthcare costs are the highest among industrialized nations and are constantly increasing, hospitals contend with constant attempts to reduce their spending. In this complex environment, a few behaviors are key to success, including 1) integration and 2) maintaining non-profit status. Catholic hospitals, despite their roots in charity, were remarkably ready for this market shift.
Hospitals today are engaging in extensive horizontal integration. In other words, hospitals that perform similar services are joining together to form major corporations, much like Bellsouth and Cingular Wireless combining into AT&T. These relationships began as largely regional cooperation, but they are increasingly crossing state lines. Large corporations now often own hundreds of hospitals spread out through the United States. Prominent examples include the Hospital Corporation of America (HCA) and Community Health Systems (CHS). Membership gives hospitals bargaining power. They can force insurance companies to accept higher rates for procedures, because insurance companies have fewer choices for hospitals. In some cases, there may be only one hospital group in a region, giving them an essential monopoly. While these relationships can take on a few different forms3A hospital “network” is generally a regional group of hospitals who agree to work together but are technically separate. A hospital “system” indicates that one corporation owns many hospitals—the hospitals may operate independently, but are ultimately beholden to the larger corporation., I will refer to them all as “groups” in this article.
Catholic hospitals, because of the hierarchy and interconnectedness of the Catholic Church, were exceptionally ready to engage in this system behavior. They were already coordinating care and funds, as one Catholic order might own several hospitals. When we look at system membership trends over the past 12 years, we can see that Catholic hospitals were far ahead of the curve, regardless of size. A Catholic network, Ascension Health, is one of the largest overall hospital systems in the nation.
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In the figure above, it is striking that Catholic hospitals remain close to 100 percent affiliated, regardless of size. They are distinct from other religiously owned hospitals (which tend to be a mix of Protestant, Islamic, and Jewish), as well as from all secular facilities. In fact, their pattern most closely resembles for-profit facilities—the group most likely to be prioritizing business over charity. They are well-positioned in the market, with large market power and wide reach.
Catholic hospitals also use religious affiliation as a form of control. All Catholic facilities are required to uphold a national agreement, which indicates what care they will give and what values they will uphold. This agreement is above and beyond group agreements, and includes explicit instructions like, “Catholic health care ministry witnesses to the sanctity of life ‘from the moment of conception until death.’” It also prohibits the prescription of contraceptives and infertility treatments that “substitute for the marriage act.” The presence of these extensive rules makes it easier for Catholic hospitals to link, as they already have shared beliefs and approaches. It also makes it harder for Catholic hospitals to join with non-Catholic systems.
Over time, these hospital groups, both Catholic and secular, have gotten bigger in both size and spread. The interactive map below showcases how Catholic hospital network affiliation has grown over time. The data used comes from the American Hospital Association Annual Survey and represents over 96% of all hospitals in the United States. Those included below are hospitals that had over 50 beds, served Medicare patients, and reported being general, acute care facilities.
You can view by year and hospital type using the top menus, and explore two different map configurations: 1) whether a hospital was part of a system (blue vs black) or 2) which system each hospital belongs to. Hover over the map to examine individual data points, click and drag to zoom in, shift+click+drag to move the map, and double-click to reset the map size. Click once on a single category (like “Other”) to filter it out.
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It is interesting to note that geography clearly does not play a central role for Catholic hospitals. Their interconnectedness allowed them to create transnational groups extremely quickly—much faster than non-Catholic institutions. Unlike other types, like non-profits, Catholic hospitals are also primarily owned by large groups. A few key players, like Ascension Health, can be seen growing and spreading over time. This gives Catholic hospitals exceptional bargaining power.
2. Non-Profit Status
It is surprisingly desirable for hospitals to be non-profit. Hospitals with a non-profit classification (501 (c) (3) status) receive substantial tax breaks. Further, they are eligible to receive charitable donations and issue tax-exempt bonds. In exchange for these benefits, they are expected to provide “community benefit” and reinvest all profit. However, most studies find that the charity they provide tends to fall far below the value of the exemption—one recent study estimated that only 60% hospitals are providing a comparable amount of community benefit. States often have limited power in addressing this issue, as hospitals are major employers in their state, and can threaten to leave or significantly reduce wages. “Community benefit” can include questionable claims—things like passing out flyers advertising the hospital or “free” mobile blood pressure vans that refers patients with high blood pressure to the hospital. The stringency of reporting requirements also varies greatly by state. Matters are further complicated by the fact that individual non-profit hospitals can be, and often are, owned by for-profit corporations.
Catholic hospitals are all classified as non-profits. They have been a natural fit into the non-profit claim since the beginning, providing the very first “charity care” in the nation. It is less clear, however, that they have maintained their philanthropic mission in providing care (despite their formal claims to the contrary). In my own investigation of federal hospital financial data from 2005 to 2016, I found that Catholic hospitals have reported significantly less uncompensated care than community hospitals for the past decade and have been providing significantly less uncompensated care than secular non-profits since 2011. This difference remains significant even after taking into consideration for things like hospital size, occupancy level, and overall income. The bar graph below illustrates these differences for a few key years. It utilizes the proportion of revenue spent on uncompensated care, because this helps control for size and income differences.
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The reported amount spent does not indicate the quality of charity care provided by Catholic facilities. Perhaps they do not spend more than secular facilities, but they spend all of that money on helping the uninsured homeless instead of self-serving pamphlets. Categorizing charity care is difficult, especially when hospitals do not want to be critiqued for inadequate community service, but the evidence for higher quality community benefit is mixed at best. They are just as likely as secular non-profits to move out of critical-need areas and into more profitable suburbs—in the AHA data, they are only slightly more likely than non-profits to serve rural areas, and are less likely to be Sole Community Providers. Though they emphasize care for high-risk infants, their outcomes are not better than secular facilities. One older study, however, did find that they provide more compassionate care, suggesting that they may differentiate themselves by emphasizing whole-person health practices and better chaplain support. But as I mentioned above, Catholic hospitals are best differentiated by what they don’t provide: contraceptive and abortive services.
So we come back to this article’s central question. Does religion truly remain a core belief, guiding hospitals towards better and more generous care, or has it become an advertising slogan? While it is impossible to answer this question definitively, current evidence suggests the latter. I could not find any evidence that Catholic hospitals perform more charity care than their counterparts. They appear, if anything, to behave similarly to for-profit hospitals. When religion and business are pitted against each other, it appears that business may win out.
Note: The R code used to produce this is post,
as well as related work, is available on my website:
Allison Roberts is a graduate student at Emory University, pursuing a Master’s in Public Health (focusing on Health Policy) and PhD in Sociology. Her work focuses on the tension between healthcare, religion, and business in the United States. She is particularly interested in how the profitability of certain specialty surgeries, like weight-loss and robotic surgeries, have led to their overuse. In her free time, she likes to go hiking with her dog, Martha.