Hospital Cost Report Information System Research Articles

Policy implications of fixed-to-total-cost ratio variation across rural and urban hospitals.

Hospitals with lower fixed-to-total-cost ratios may be better positioned to remain financially viable when reducing service volumes required by many value-based payment systems. We assessed whether hospitals in rural areas have higher fixed-to-total-cost ratios, which would tend to create a systematic disadvantage in such an environment. Our observational study used a mixed-effects, repeated-measures model to analyze Medicare Hospital Cost Report Information System data for 2011-2020. We included all 4,953 nonfederal, short-term acute hospitals in the United States that are present in these years. After estimating the relationship between volume (measured in adjusted patient days) and patient-care costs in a model that controlled for a small number of hospital characteristics, we calculated fixed-to-total-cost ratios based on our model's estimates. We found that nonmetropolitan hospitals tend to have higher average fixed-to-total-cost ratios (0.85-0.95) than metropolitan hospitals (0.73-0.78). Moreover, the degree of rurality matters; hospitals in micropolitan counties have lower ratios (0.85-0.87) than hospitals in noncore counties (0.91-0.95). While the Critical Access Hospital (CAH) designation is associated with higher average fixed-to-total-cost ratios, high fixed-to-total-cost ratios are not exclusive to CAHs. Overall, these results suggest that hospital payment policy and payment model development should consider hospital fixed-to-total-cost ratios particularly in settings where economies of scale are unattainable, and where the hospital provides a sense of security to the community it serves.

The Effect of the Magnet Recognition Signal on Hospital Financial Performance.

The objective of this study was to investigate the effect of the Magnet Recognition (MR) signal on hospital financial performance. MR is a quality designation granted by the American Nurses Credentialing Center (ANCC). Growing evidence shows that MR hospitals are associated with various interrelated positive outcomes that have been theorized to affect hospital financial performance.In this study, which covered the period from 2000 to 2010, we applied a pre-post research design using a longitudinal, unbalanced panel of MR hospitals and hospitals that had never received MR designation located in urban areas in the United States. We obtained data for this analysis from Medicare's Hospital Cost Report Information System, the American Hospital Association Annual Survey Database, the Health Resources & Services Administration's Area Resource File, and the ANCC website. Propensity score matching was used to construct the final study sample. We then applied a difference-in-difference model with hospital fixed effects to the matched hospital sample to test the effect of the MR signal, while controlling for both hospital and market characteristics.According to signaling theory, signals aim to reduce the imbalance of information between two parties, such as patients and providers. The MR signal was found to have a significant positive effect on hospital financial performance. These findings support claims in the literature that the nonfinancial benefits resulting from MR lead to improved financial performance. In the current healthcare environment in which reimbursement is increasingly tied to delivery of quality care, healthcare executives may be encouraged to pursue MR to help hospitals maintain their financial viability while improving quality of care.

Establishing a Baseline: Community Benefit Spending by Not-for-Profit Hospitals Prior to Implementation of the Affordable Care Act.

Community Benefit spending by not-for-profit hospitals has served as a critical, formalized part of the nation's safety net for almost 50 years. This has occurred mostly through charity care. This article examines how not-for-profit hospitals spent Community Benefit dollars prior to full implementation of the Affordable Care Act (ACA). Using data from 2009 to 2012 hospital tax and other governmental filings, we constructed national, hospital-referral-region, and facility-level estimates of Community Benefit spending. Data were collected in 2015 and analyzed in 2015 and 2016. Data were matched at the facility level for a non-profit hospital's IRS tax filings (Form 990, Schedule H) and CMS Hospital Cost Report Information System and Provider of Service data sets. During 2009, hospitals spent about 8% of total operating expenses on Community Benefit. This increased to between 8.3% and 8.5% in 2012. The majority of spending (>80%) went toward charity care, unreimbursed Medicaid, and subsidized health services, with approximately 6% going toward both community health improvement and health professionals' education. By 2012, national spending on Community Benefit likely exceeded $60 billion. The largest hospital systems spent the vast majority of the nation's Community Benefit; the top 25% of systems spent more than 80 cents of every Community Benefit dollar. Community Benefit spending has remained relatively steady as a proportion of total operating expenses and so has increased over time-although charity care remains the major focus of Community Benefit spending overall. More than $60 billion was spent on Community Benefit prior to implementation of the ACA. New reporting and spending requirements from the IRS, alongside changes by the ACA, are changing incentives for hospitals in how they spend Community Benefit dollars. In the short term, and especially the long term, hospital systems would do well to partner with public health, other social services, and even competing hospitals to invest in population-based activities. The mandated community health needs assessment process is a logical home for these sorts of collaborations. Relatively modest investments can improve the baseline level of health in their communities and make it easier to improve population health. Aside from a population health justification for a partnership model, a business case is necessary for widespread adoption of this approach. Because of their authorities, responsibilities, and centuries of expertise in community health, public health agencies are in a position to help hospitals form concrete, sustainable collaborations for the improvement of population health. The ACA will likely change the delivery of uncompensated and charity care in the United States in the years to come. How hospitals choose to spend those dollars may be influenced greatly by the financial and political environments, as well as the strength of community partnerships.

How Would Rural Hospitals Be Affected by Loss of the Affordable Care Act's Medicare Low-Volume Hospital Adjustment?

The low-volume hospital (LVH) payment adjustment established in the Patient Protection and Affordable Care Act (ACA) of 2010 is scheduled to sunset on October 1, 2017. The purpose of this analysis was: (1) to estimate the effect of the ACA LVH adjustment on qualifying hospitals' profitability margins; and (2) to examine hospital and market characteristics of the hospitals that would be most adversely affected by the loss of the ACA LVH adjustment. 2004-2015 data from the Hospital Cost Report Information System, Hospital Market Service Area File and Nielsen-Claritas Pop-Facts file were used to estimate difference-in-difference regression models with hospital-level random effects in order to determine whether the ACA LVH adjustment improved qualifying rural hospitals' profitability margins. Recycled predictions estimated the effect of losing the ACA LVH adjustment on profitability margins. Bivariate analyses explored associations between the predicted profitability margins and hospital and market characteristics. The ACA LVH adjustment significantly improved Sole Community Hospitals' Medicare inpatient margins in the year they received the adjustment, and it had a large but statistically insignificant effect on the profitability margins of other rural hospitals. Hospitals that would be the most adversely affected by loss of the ACA LVH adjustment were more likely to be small, located in the South, and in high-poverty markets with higher proportions of black and uninsured individuals. Elimination of the ACA LVH adjustment would have differential effects on subgroups of hospitals, and those located in markets serving historically underserved populations would be the most adversely affected.

California's Minimum Nurse Staffing Legislation: Results from a Natural Experiment

To determine whether, following implementation of California's minimum nurse staffing legislation, changes in acuity-adjusted nurse staffing and quality of care in California hospitals outpaced similar changes in hospitals in comparison states without such regulations. Data from the American Hospital Association Annual Survey of Hospitals, the California Office of Statewide Health Planning and Development, the Hospital Cost Report Information System, and the Agency for Healthcare Research and Quality's Health Care Cost and Utilization Project's State Inpatient Databases from 2000 to 2006. We grouped hospitals into quartiles based on their preregulation staffing levels and used a difference-in-difference approach to compare changes in staffing and in quality of care in California hospitals to changes over the same time period in hospitals in 12 comparison states without minimum staffing legislation. We merged data from the above data sources to obtain measures of nurse staffing and quality of care. We used Agency for Healthcare Research and Quality's Patient Safety Indicators to measure quality. With few exceptions, California hospitals increased nurse staffing levels over time significantly more than did comparison state hospitals. Failure to rescue decreased significantly more in some California hospitals, and infections due to medical care increased significantly more in some California hospitals than in comparison state hospitals. There were no statistically significant changes in either respiratory failure or postoperative sepsis. Following implementation of California's minimum nurse staffing legislation, nurse staffing in California increased significantly more than it did in comparison states' hospitals, but the extent of the increases depended upon preregulation staffing levels; there were mixed effects on quality.

The Impact of HCAʼs 2006 Leveraged Buyout on Hospital Performance

Leveraged buyout (LBO) arrangements are a reorganization strategy whereby a firm assumes a substantial amount of debt to buy back its publicly held stock to become privately held. LBOs offer a firm several advantages and have the potential to increase efficiency. In the past 20 years, several healthcare firms have engaged in LBOs, but the literature on performance changes in healthcare organizations as a result of an LBO is limited. In this article, we report on a study that examined the performance of Hospital Corporation of America (HCA) hospitals before and after the LBO that was initiated in 2006. We used data from the Medicare Hospital Cost Report Information System and analyzed data from 130 HCA hospitals and 490 comparison hospitals. Findings show that HCA hospitals reduced expenses and their number of full-time equivalents (FTEs) relative to local competitor hospitals. HCA hospitals' cash-flow-margin ratio was substantially higher when adjusted for its local competing hospitals at the beginning of the LBO as well as at end of the LBO. When compared to local hospitals, HCA hospitals had a significant decrease in their capital investment in fixed assets from 2006 to 2009. These findings underscore the effectiveness of HCA's management strategies to repay debt and increase the value of the company, and they are informative for healthcare firms and their managers who are considering LBOs.

Critical care medicine in the United States 2000–2005: An analysis of bed numbers, occupancy rates, payer mix, and costs*

To analyze the evolving role, patterns of use, and costs of critical care medicine in the United States from 2000 to 2005. Retrospective study of data from the Hospital Cost Report Information System (Centers for Medicare and Medicaid Services, Baltimore, Maryland). Nonfederal, acute care hospitals with critical care medicine beds in the United States. None. None. We analyzed hospital and critical care medicine beds, bed types, days, occupancy rates, payer mix (Medicare and Medicaid), and costs. Critical care medicine costs were compared with national cost indexes. Between 2000 and 2005, the total number of U.S. hospitals with critical care medicine beds decreased by 12.2% (from 3,586 to 3,150). Although the number of hospital beds decreased by 4.2% (from 655,785 to 628,409), both hospital days and occupancy rates increased by 5.1% (from 145.1 to 152.5 million) and 13.7% (from 59% to 67%), respectively. Critical care medicine beds increased by 6.5% (from 88,252 to 93,955), days by 10.6% (from 21.0 to 23.2 million), and occupancy rates by 4.5% (from 65% to 68%). The majority (90%) of critical care medicine beds were classified as intensive care, premature/neonatal, and coronary care unit beds. The percentage of critical care medicine days used by Medicare decreased by 3.8% (from 37.9% to 36.5%) compared with an increase of 15.5% (from 14.5% to 16.8%) by Medicaid. From 2000 to 2005, critical care medicine costs per day increased by 30.4% (from $2698 to $3518). Although annual critical care medicine costs increased by 44.2% (from $56.6 to $81.7 billion), the proportion of hospital costs and national health expenditures allocated to critical care medicine decreased by 1.6% and 1.8%, respectively. However, the proportion of the gross domestic product used by critical care medicine increased by 13.7%. In 2005, critical care medicine costs represented 13.4% of hospital costs, 4.1% of national health expenditures, and 0.66% of the gross domestic product. Critical care medicine continues to grow in a shrinking U.S. hospital system. The critical care medicine payer mix is evolving, with Medicaid increasing in its percentage of critical care medicine use. Critical care medicine is more cost controlled than other healthcare indexes, but is still using an increasing percentage of the gross domestic product. Our updated and comprehensive critical care medicine use and cost analysis provides a contemporary benchmark for the strategic planning of critical care medicine services within the U.S. healthcare system.

Critical care medicine use and cost among Medicare beneficiaries 1995–2000: Major discrepancies between two United States federal Medicare databases*

A comparison of federal Medicare databases to identify critical care medicine (CCM) use, cost discrepancies, and their possible causes. A 6-yr (1995-2000) retrospective analysis of Medicare hospital and CCM use and cost, comparing the Hospital Cost Report Information System (HCRIS) with Medicare Provider Analysis and Review File (MedPAR) supplemented when necessary by Health Care Information System (HCIS) (identified herein as MedPAR/HCIS). All nonfederal U.S. hospitals. None. None. Data are presented as days (M = million) and costs ($; B = Billion) for both hospitals and CCM. Between 1995 and 2000, the number of hospital days decreased in both databases: HCRIS (-13.2%; 78M to 67.7M) and MedPAR/HCIS (-14.1%; 82.8M to 71.1M). CCM days decreased in HCRIS (-4.6%; 8.3M to 7.9M). In contrast, CCM days increased in MedPAR/HCIS (7.2%; 13.9M to 14.9M). The discrepancy in CCM days between HCRIS and MedPAR/HCIS increased from 40% (5.6M days) in 1995 to 47% (7M days) in 2000. Two CCM billing codes (intensive care unit and coronary care unit "post/intermediate") used in MedPAR/HCIS were responsible for 73% on average per year, over the study period, for this CCM discrepancy. The use of these two codes progressively increased (44%; 3.9M to 5.6M days) by the end of the study. The cumulative 6-yr discrepancy in CCM days between HCRIS and MedPAR/HCIS (37.3M days) had a calculated cost of $92.3B. We have identified major, and progressively increasing, discrepancies between two U.S. federal databases tabulating hospital and CCM use and cost for Medicare beneficiaries. Two CCM "post/intermediate" billing codes in MedPAR/HCIS were predominantly responsible for the CCM discrepancy. To accurately assess Medicare CCM use and cost, either HCRIS, or MedPAR/HCIS without the "post/intermediate" codes, should be used.

Changes in critical care beds and occupancy in the United States 1985–2000: Differences attributable to hospital size

To determine the relationship between hospital size and changes in the number of critical care medicine (CCM) beds, proportion of hospital beds allocated to CCM, and CCM occupancy in acute care hospitals in the United States from 1985 to 2000. A 16-yr (1985 to 2000) retrospective analysis was performed using the Hospital Cost Report Information System (Centers for Medicare and Medicaid Services, Baltimore, MD) on U.S. acute care hospitals that provided CCM. Hospitals were stratified into four groups (small, 1-100 beds; medium, 101-300 beds; large 301-500 beds; and extra large, >500 beds). Nonfederal, acute care hospitals with CCM units in the United States. None. None. Changes in the number of hospitals, non-CCM and CCM beds, the proportion of CCM to hospital beds, and their occupancy rates. Between 1985 and 2000, the number of hospitals providing CCM decreased overall (4,150 to 3,581, -13.7%). The greatest decreases were seen in large (-39%) and extra-large (-40%) hospitals. Small hospitals increased minimally (3.3%). The number of non-CCM beds decreased (820,300 to 566,900, -30.9%), most prominently in large (-44.2%) and extra-large (-46.1%) hospitals. In contrast, CCM beds increased overall (69,300 to 87,400, 26.1%), especially in small (27%) and medium (44.2%) hospitals. The proportion of total hospital beds assigned to CCM increased (71.8%), most markedly in large (93.5%) and extra-large (85.7%) hospitals. Non-CCM occupancy decreased (-6.4%), particularly in small (-7.5%) and extra-large (-5.8%) hospitals. However, regardless of hospital size, CCM occupancy changed negligibly (0.4%). At every time point studied, CCM occupancy was greater than non-CCM occupancy within each size group. As hospital size increased, occupancy rates increased. Across hospitals of all sizes, CCM bed numbers are increasing, whereas non-CCM bed numbers are decreasing. Although the CCM bed capacity is increasing at a greater percentage rate in smaller hospitals, the assignment of hospital beds to CCM remains higher in the larger hospitals. In addition, CCM bed occupancy is greater in larger institutions. These findings may help guide the future development of hospital size-based CCM benchmarking standards and guidelines.

Critical access hospitals: how many rural hospitals will meet the requirements?

Although the Medicare Rural Hospital Flexibility Program (MRHFP), which establishes a new designation for limited-service hospitals called critical access hospitals (CAH), intends to assist small rural hospitals having financial difficulty, it is unclear how many hospitals will qualify for the program. Potential CAHs are identified and the strategic issues that will impact actual participation in the program are discussed. Potential CAHs are identified by applying the legislative criteria for designation to a data set created from both the 1992-1995 Medicare Hospital Cost Report Information System and the 1993 and 1995 Prospective Payment System's Impact files. Descriptive analyses are used to identify potential CAHs by three parameters: distance to nearest hospital, average daily census and operating margin. Results indicate that the majority of potential CAHs have low volume and report poorer operating margins than other rural hospitals. Findings also show that the mileage requirements significantly impact the number of potential CAHs. There is more than a ninefold difference between the 93 hospitals that meet the mileage criterion and the 864 hospitals that might be eligible if certified by the state as "necessary providers," regardless of distance to the nearest hospital. The MRHFP is designed to prevent small, isolated hospitals from closing and thus to ensure continued access to care for rural residents. However, the number of potential CAHs that participate will clearly hinge on the flexibility of the program and the ability of states to determine "necessary providers."

Medicare funding of nurse education. The case for policy change.

To determine the magnitude and distribution of US Medicare funding for nursing education and to assess the extent to which Medicare funding contributes to meeting national health care workforce priorities. Medicare Hospital Cost Report Information System, American Hospital Association Annual Survey of Hospitals, and National League for Nursing national surveys of schools of nursing. Using hospital identifiers, data from three data sets were merged and analyzed to estimate percentage distributions of Medicare funding according to types of educational programs, hospital characteristics, and student enrollment. Fifteen percent of direct Medicare graduate medical education funding goes to hospitals for the training of nurses and paramedical personnel. Totaling approximately $174 million in 1991, 71% of these funds went to hospitals for nursing education costs. Most of the nation's teaching hospitals (289 of 381 Council of Teaching Hospitals member hospitals) and nurse education programs (1112 of 1484) do not qualify under existing policies for Medicare nursing education reimbursement. Sixty-six percent of Medicare nurse training funds, totaling $114 million in 1991, went to 145 hospitals operating diploma nursing programs; these programs produce less than 10% of nurse graduates. Three states (Pennsylvania, New Jersey, and Ohio) received nearly one half (48%) of the $114 million for diploma nursing education. Medicare is the largest single source of federal support for nursing education. Yet, the majority of Medicare nursing education funding goes to hospitals affiliated with an increasingly smaller, idiosyncratic subset of nurse training programs. Unlike graduate medical education, Medicare supports primarily preprofessional education in nursing. Graduate education, including the preparation of nurse practitioners, does not generally qualify for reimbursement. Medicare reimbursement for nursing education must be retargeted.

The Case for Policy Change

Objectives. —To determine the magnitude and distribution of US Medicare funding for nursing education and to assess the extent to which Medicare funding contributes to meeting national health care workforce priorities. Data Sources. —Medicare Hospital Cost Report Information System, American Hospital Association Annual Survey of Hospitals, and National League for Nursing national surveys of schools of nursing. Data Analysis. —Using hospital identifiers, data from three data sets were merged and analyzed to estimate percentage distributions of Medicare funding according to types of educational programs, hospital characteristics, and student enrollment. Results. —Fifteen percent of direct Medicare graduate medical education funding goes to hospitals for the training of nurses and paramedical personnel. Totaling approximately $174 million in 1991, 71% of these funds went to hospitals for nursing education costs. Most of the nation's teaching hospitals (289 of 381 Council of Teaching Hospitals member hospitals) and nurse education programs (1112 of 1484) do not qualify under existing policies for Medicare nursing education reimbursement. Sixty-six percent of Medicare nurse training funds, totaling $114 million in 1991, went to 145 hospitals operating diploma nursing programs; these programs produce less than 10% of nurse graduates. Three states (Pennsylvania, New Jersey, and Ohio) received nearly one half (48%) of the $114 million for diploma nursing education. Conclusions. —Medicare is the largest single source of federal support for nursing education. Yet, the majority of Medicare nursing education funding goes to hospitals affiliated with an increasingly smaller, idiosyncratic subset of nurse training programs. Unlike graduate medical education, Medicare supports primarily preprofessional education in nursing. Graduate education, including the preparation of nurse practitioners, does not generally qualify for reimbursement. Medicare reimbursement for nursing education must be retargeted. (JAMA. 1995;273:1528-1532)