Health Scan: Non-profit does not mean non-efficient when it involves elderly care

While a day of inpatient care costs more in NPO homes than in for-profit homes, the non-profit institutions were found to offer higher quality of service.

There is a widespread belief that business equals efficiency, and that non-profit organizations (NPOs) which are not based on business principles are wasteful and inefficient. This attitude has led to attempts to force NPOs in all fields to be more "businesslike" in their operation. But a new study by researchers at the Taub Center for Social Policy in Jerusalem has found that, at least in long-term geriatric facilities, there is no difference in economy efficiency between NPOs and for-profit facilities. Prof. Israel Luski and Dr. Yehudit Givon of the Taub Center, which is funded by the Joint Distribution Committee, found that non-profit old-age homes keep quality and price balanced. While a day of inpatient care costs more in NPO homes than in for-profit homes, the non-profit institutions were found to offer higher quality of service. An additional factor found to affect the level of efficiency in a given institution was the occupancy rate: the higher the rate, the lower the cost per bed. Second is the proportion of nursing beds in the institution: the higher the percentage, the greater the efficiency. The results of the study should be relevant to the Health Ministry, which funds 70 percent of geriatric nursing beds, sets the rates that the institutions are reimbursed, determines the standards by which they are managed, licenses them and inspects the quality of care that they provide. The ministry is in charge of facilities for patients requiring nursing care, the mentally frail, multiple-problem nursing patients and the elderly in hospital rehabilitation wards. A higher rate of reimbursement boosts an NPO's income, but being non-profit, it has to spend more on a variety of services, including those that improve quality of care. Accordingly, the higher quality of service delivered by NPOs originates partly in the higher rate that the ministry pays them. When patients finance their own stay in an old-age home, they are willing to pay more for a place in a non-profit facility than one run as a business, the researchers found, even if both offer the same level of quality. NPOs have higher occupancy rates than for-profits. This would suggest that the public prefers NPOs because it considers them more reliable. The Taub Center team also found that institutions run by women offer higher-quality service. The ministry has initiated a reform plan for the sector whereby rates paid to institutions would be set on the basis of quality. The plan even establishes personnel ratios and standardized rates for NPOs and for for-profit facilities, steps that would reduce the discrimination that currently exists between these types of institutions. Although these changes are reasonable and sensible, they write, several components of the reform should be reconsidered, especially in the following respects: To receive the highest possible reimbursement rate that the reform proposes, old-age homes must meet criteria that few will be able to attain. As a result, some facilities will receive a lower rate than they currently receive. Since the findings of the study show that institutions adjust the quality of their care to the government rate, lowering the rate may cause many homes to lower their quality of service. But the researchers note that the reform plan establishes lower personnel ratios for old-age homes than are currently used: If the old-age homes cut back on their personnel, as the reform proposes, the quality of care will probably decline. Since there is little objective information available to the public about old-age facilities, the researchers recommend that the ministry make public the results of its inspections, possibly in the form of star ratings like hotels used to have. They concluded that their findings are probably relevant to other service-providing fields, such as health care, higher education and religious services, in which NPOs compete with for-profit businesses. NPOs have major influences on the Israeli economy, as they constitute 10 percent of the gross domestic project. KATIF YAD SARAH BRANCH MAY REOPEN IN NITZAN After 20 years of activity, the Yad Sarah branch in Neveh Dekalim closed its doors along with everything else in Gush Katif. The branch had been open five days a week and was manned by 12 volunteers, all residents of Neveh Dekalim and neighboring settlements. The branch volunteers loaned out hundreds of items of medical equipment items every year. In the past weeks the last of the items that had not been returned to the branch were collected, and Yad Sarah workers removed the equipment and the contents of the branch for return to the main warehouse. In a farewell message to volunteers, Yad Sarah administrators wrote: "We have never before parted with devoted volunteers... We wish to thank you for all you have done for the residents of Gush Katif and those that have visited there, for the human respect you demonstrated for every person who borrowed medical equipment, for the improvement in the quality of life you provided for every patron and the love and smiles with which you came to volunteer in the branch." The letter ended with a request that the workers continue to volunteer in a Yad Sarah branch in their new place of residence. Yad Sarah is considering the possibility of opening a new branch in the Nitzan area, where many of the settlers have been evacuated.