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Publication Date

7-1996

Document Type

Article

Abstract

Public hospitals have long functioned as the primary source of acute care services in rural communities. Yet, just as the farm crisis and population shifts of the 1980s eroded the economic base of rural America, these same factors-coupled with changes in health care financing-have eroded the stability of rural hospitals. Many have closed or converted to subacute services. Other hospitals, facing the threat of future insolvency, inability to upgrade technology, loss of patient revenue base, or legal obstacles in forming cooperative networks with other providers, have opted to surrender their cumbersome governmental status to become leaner, private players in the new competitive health care market.

Privatizations soared to quick popularity in the 1980s and covered a wide range of public functions. Whether health care services, electrical utilities, or garbage collection, the privatization movement asked whether these particular duties must be performed by government, and if not, it demanded that government divest itself of that role, ceding its role to the private sector. Theoretically, the private sector would be able to operate more efficiently, less burdened by regulation and politics. In health care, perhaps more so than in other areas, the issue of the proper governmental role in providing or financing health care services has generated significant passion and anguish. Especially in many rural areas, a majority of elderly and less affluent residents rely on the public hospital to provide care. There is, in their eyes, no other alternative within a reasonable travel distance. Furthermore, the public hospital may well be the last remaining major employer in the community. While taxpayers may wish to reduce the burden of supporting the public hospital, they understandably recoil at the prospect of reductions in force with the inherent implications of lost wages and reduced consumer spending.

Because the timely provision of medical care is literally a matter of life and death, and because the public hospital may be the last economic anchor in a rural town, privatizations of rural public hospitals can be especially complex in form, function, and financing. Of particular concern is-or should be-whether the mode of privatization can effectively realize the ultimate governmental duty to provide access to care for the indigent. This Article presents and discusses in detail various corporate models for restructuring public hospitals, as they have developed in recent years.

The Article analyzes each model in terms of its ability to achieve the usual goals of management flexibility, plus the stated inquiry of this symposium: assuring continued access and supporting indigent care.

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