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DURHAM, N.C. -- In the competitive and cost-conscious world
of health care, more and more communities must decide what to
do with their local hospital.

Should they sell to it a for-profit or not-for-profit
organization? Should they lease it or enter into a joint
partnership? Or should they continue to run the hospital so
they can maintain control over the way it is operated?

Duke University health care researchers have spent slightly
more than a year doing case studies of 10 North and South
Carolina hospitals that have undergone conversions since 1981,
and found that no single "best" answer fits all communities. As
a result, they have published a guide to help communities
consider all their options in navigating their way through this
important decision.

"What's very clear from the case studies is there is not
just one way to do this, and there's not one model that fits
every community," said Chris Conover, an assistant research
professor with Duke's Center for Health Policy, Law and
Management and the project's director. "The challenge in any
conversion is finding a good fit between the needs of the
community and the needs of a prospective partner."

In making any decision, a community should, among other
things, understand the hospital's role in the community; know
the major options for conversion; determine the hospital's
value; and, in most cases, consider a number of bids.

The 92-page guide, as well as a companion booklet that
discusses the 10 specific conversion cases, are being mailed to
hospital administrators and community interest groups
throughout the Carolinas. The research was supported with
funding from The Duke Endowment, The Fullerton Foundation of
Gaffney, S.C., and The Self Foundation of Greenwood, S.C.

"I think a lot of communities have a lot of concerns about
for-profit conversions. Is that a bad thing? What does that do
to a community? And there is this concern that maybe
communities are being taken advantage of by organizations that
know what they're doing and know how to take advantage of
them," Conover said. "We didn't find that was true in these
case studies. We found in many cases the communities were
actually pretty shrewd in terms of getting multiple bids, in
terms of having an open process and having a give and take in
reaching an agreement."

The 10 Duke researchers studied six hospital conversions in
South Carolina: Byerly Hospital, Hartsville; Hilton Head
Hospital; Mary Black Memorial Hospital, Spartanburg; Piedmont
Regional Medical Center, Rock Hill; Providence Hospital,
Columbia; and Upstate Carolinas Medical Center, Gaffney. In
North Carolina, the researchers studied Cape Fear Memorial
Hospital, Wilmington; Cleveland Regional Medical Center,
Shelby; Roanoke-Chowan Hospital, Ahoskie; and Wake Medical
Center, Raleigh.

"I think, on balance, most of the people we talked to felt
like it was a good thing to have done the conversion, for a
variety of reasons," Conover said. "In some cases, they felt
like they had a hospital whereas their hospital may have shut
down if no conversion had taken place, or they had a new
facility whereas they might have struggled to keep patching and
repairing an old facility, or they had a facility with expanded
services as opposed to always being on the brink of
survival.

"I'm sure out of the 100-plus people we talked to, there
might have been a handful who would have second thoughts about
doing a conversion at all. But, for the most part, the sense we
got from the people we talked to was that converting was better
than trying to stick with the status quo because they didn't
think the status quo was viable, either in the very short term
-- that is, they were worried about whether the hospital would
be around even in a year or two -- and in other cases it was a
much longer term calculation in which they concluded that they
couldn't just go it alone in perpetuity. They had to find a
partner or get out of the business of being in health
care."

Conover said there were a few instances where a public
hospital was sold to a for-profit organization to remove
managerial politics and to run the hospital in a more
businesslike fashion. Sometimes that businesslike approach put
off long-time patients who had developed a personal
relationship with a specific billing clerk, for instance,
instead of an anonymous collection agency, he added.

Conover said managed care is a big factor fueling today's
hospital conversions. From 1983 to 1997, 18 Carolina hospitals
changed to for-profit status and 11 public hospitals converted
to not-for-profit status, and Conover expects that trend to
continue.

"With managed care, there is much more an impetus toward
efficiency and getting cost structures down," Conover noted.
Plus, being part of a network gives hospitals more leverage, he
said.

Conover said officials from The Duke Endowment and the two
foundations approached the Duke Center for Health Policy, Law
and Management about doing a study because they were concerned
about the trend toward hospital conversions and "wanted to
provide information to communities to help them better make
conversion decisions. They thought if we could go to some
communities to see what had actually happened in the aftermath
of conversions, that would help guide other communities that
had to go through the process.

"And the idea was to not only look at what happened to the
hospital itself -- lengths of stay, numbers of staff -- but the
broader impact on the community."

Other Duke faculty members taking part in the study were Dr.
Lloyd Michener of the department of community and family
medicine, who was the principal investigator; Frank Sloan, the
director of the Center for Health Policy, Law and Management;
and Donald Taylor, an assistant research professor at the Terry
Sanford Institute of Public Policy.

The researchers did not study the recently finalized
partnership between the Duke University Medical Center and
Durham Regional Hospital because the process was ongoing when
the study got underway.

The challenge in any conversion is finding a good fit
between the needs of the community and the needs of a
prospective partner, Conover said. For example, some firms
specialize in taking over hospitals in rural communities.

"So, if you are in that type of a community, it behooves you
to partner with that kind of an entity because they know what
they're doing, they've got lots of experience in communities
just like yours, and they're in it for the long haul. This is
not just an acquisition and tomorrow they are going to sell it
off to the highest bidder. When communities are trying to find
a partner, they have to figure out what exactly are the
objectives of their prospective partner," Conover said.

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