Hospital Financial Performance Research Articles

종합병원의 수익성에 영향을 미치는 결정요인 (흑자, 적자병원의 재무성과에 대한 융복합적인 차이를 중심으로)

This study divided hospital management performance as surplus and deficit, Liquidity, Growth, Turnover Ratios, Productivity, Operating Expense, Patient Care Performance and evaluate the relationship between profitability. In addition to providing a useful basis for seeking profitability and effective management measures based on the findings of the hospital has its purpose. The study period was 2013 to identify the hospital's financial performance as evaluation criteria, were selected for a total of 147 hospitals surveyed. In conclusion, the more profitable medical and hospital financial performance, results showed a higher rate. In addition to the factors affecting the profitability of the Salaries, Administrative Expenses, Material Costs was a major factor. To to enhance the future profitability of hospital care it is also important to increase revenue, but Salaries, the cost reduction-effective strategy for reducing Administrative Expenses may be required.

Rural Hospital Mergers and Acquisitions: Which Hospitals Are Being Acquired and How Are They Performing Afterward?

The number of stand-alone rural hospitals has been shrinking as larger health systems target these hospitals for mergers and acquisitions (M and As). However, little research has focused specifically on rural hospital M and A transactions. Using data from Irving Levin Associates' Healthcare M and A Report and Medicare Cost Reports from 2005 to 2012, we examined two research questions: (1) What were the characteristics of rural hospitals that merged or were acquired, and (2) were there changes in rural hospital financial performance, staffing, or services after an M and A transaction? We used logistic regression to identify factors predictive of merger, and we used multiple regression to examine various hospital measures after an M or A. Study results showed that hospitals with weaker financial performance but lower staffing levels and staffing costs were more likely to merge or be acquired. Statistically weak evidence suggested that operating margins declined after the merger; stronger evidence suggested reductions in salary expense. There was no statistically significant evidence of changes to the number of full-time equivalent (FTE) employees, the service lines that were included in the study, capital expenditures, or the amount of debt financing among the hospitals that merged or were acquired. M and A may not result in a rapid influx of capital, a relief of debt burden, or an improvement in bottom-line profitability. However, M and A may be a viable option for maintaining the hospital and the access to care it provides.

Predictors of Payer Mix and Financial Performance Among Safety Net Hospitals Prior to the Affordable Care Act.

The objective of this study was to use audited hospital financial statements to identify predictors of payer mix and financial performance in safety net hospitals prior to the Affordable Care Act. We analyzed the 2010 financial statements of 98 large, urban safety net hospital systems in 34 states, supplemented with data on population demographics, hospital features, and state policies. We used multivariate regression to identify independent predictors of three outcomes: 1) Medicaid-reliant payer mix (hospitals for which at least 25% of hospital days are paid for by Medicaid); 2) safety net revenue-to-cost ratio (Medicaid and Medicare Disproportionate Share Hospital payments and local government transfers, divided by charity care costs and Medicaid payment shortfall); and 3) operating margin. Medicaid-reliant payer mix was positively associated with more inclusive state Medicaid eligibility criteria and more minority patients. More inclusive Medicaid eligibility and higher Medicaid reimbursement rates positively predicted safety net revenue-to-cost ratio. University governance was the strongest positive predictor of operating margin. Safety net hospital financial performance varied considerably. Academic hospitals had higher operating margins, while more generous Medicaid eligibility and reimbursement policies improved hospitals' ability to recoup costs. Institutional and state policies may outweigh patient demographics in the financial health of safety net hospitals.

Determinant Factors of Small & Medium-sized Hospital Financial Performance

Determinant Factors of Small & Medium-sized Hospital Financial Performance

Performing well in financial management and quality of care: evidence from hospital process measures for treatment of cardiovascular disease.

BackgroundFiscal constraints faced by U.S. hospitals as a result of the recent economic downturn are leading to business practices that reduce costs and improve financial and operational efficiency in hospitals. There naturally arises the question of how this finance-driven management culture could affect the quality of care. This paper attempts to determine whether the process measures of treatment quality are correlated with hospital financial performance.MethodsPanel study of hospital care quality and financial condition between 2005 and 2010 for cardiovascular disease treatment at acute care hospitals in the United States. Process measures for condition-specific treatment of heart attack and heart failure and hospital-level financial condition ratios were collected from the CMS databases of Hospital Compare and Cost Reports.ResultsThere is a statistically significant relationship between hospital financial performance and quality of care. Hospital profitability, financial leverage, asset liquidity, operating efficiency, and costs appear to be important factors of health care quality. In general, public hospitals provide lower quality care than their nonprofit counterparts, and urban hospitals report better quality score than those located in rural areas. Specifically, the first-difference regression results indicate that the quality of treatment for cardiovascular patients rises in the year following an increase in hospital profitability, financial leverage, and labor costs.ConclusionsThe results suggest that, when a hospital made more profit, had the capacity to finance investment using debt, paid higher wages presumably to attract more skilled nurses, its quality of care would generally improve. While the pursuit of profit induces hospitals to enhance both quantity and quality of services they offer, the lack of financial strength may result in a lower standard of health care services, implying the importance of monitoring the quality of care among those hospitals with poor financial health.

Relationship between Hospital Operating Freestanding-Emergency Department and Financial Performance

This study analyzed the effect of starting an FSED operation by hospitals on their market share, and the role of market share as mediator between FSED operation and financial performance using the ...

Is There a Relationship Between Value-Based Purchasing and Hospital Profitability? An Exploratory Study of Missouri Hospitals.

Recent US legislation is attempting to transition inpatient Medicare payments to a value-based purchasing (VBP) program. The VBP program is a pay-for-performance (P4P) system that incentivizes hospitals to improve patient satisfaction, health outcomes, and adherence to clinical protocols while simultaneously holding down costs. Our study evaluates (1) the impact of financial performance on the VBP adjustments and (2) whether there is a correlation between the VBP adjustment and the financial performance of Missouri hospitals that opted into the program. While upward and downward adjustments to the inpatient base rate may be related to hospital financial performance, prior financial performance may also be related to the adjustments. Financial health may allow facilities to invest and position the hospital for favorable future P4P adjustments. The results of our analysis indicate the VBP adjustment to the inpatient base rate is very small (±0.18%), clustered around zero, and is not correlated with financial performance. We also find that financial performance and improvement in the years prior to the adjustment are not related to the VBP adjustment or its respective components. This suggests that CMS is avoiding penalizing less profitable facilities, but the adjustment is also so small and tightly clustered around zero that it is failing to provide an adequate incentive to hospitals. The costs of improving patient satisfaction, clinical process adherence, health care outcomes, and efficiency above that of peers coupled with the growing number of metrics being used to calculate the VBP adjustments call into question the financial incentives of the hospital VBP program.

Management Involvement on the Board of Directors and Hospital Financial Performance

Agency theory is used to investigate the relationship between top management team involvement on not-for-profit hospitals' boards of directors (BODs) and hospital financial performance. Governance data collected in 2011 by The Governance Institute was merged with hospital financial performance data from the 2011 Medicare Cost Reports. Then, an ordinary least squares regression model, using propensity score adjustments, was used to evaluate the relationship between management involvement on the BOD and three financial performance profitability ratios: total margin, operating margin, and return on assets. The sample included 637 not-for-profit hospitals, most of which (74.1%) were not government owned. As hypothesized, we found that having a larger number of managers with voting rights on the BOD was associated with lower total margin (β = -0.011, p < .065). Similarly, we found that having a greater percentage of voting BOD members who were managers was associated with lower total margin (β = -0.296, p < .002) and return on assets (β = -0.337, p < .072). We did not find support for the notion that CEO involvement onthe BOD is associated with poorer hospital financial performance (β = -0.008, p < .437). Consistent with agency theory, our findings suggest that management involvement on the BOD is associated with poorer hospital financial performance. This finding suggests that management involvement on the BOD may impair the BOD's ability to effectively monitor the actions of management, which may lead managers to make decisions that are more consistent with their own interests than those of the organization.

PRACTITIONER APPLICATION: Management Involvement on the Board of Directors and Hospital Financial Performance

PRACTITIONER APPLICATION: Management Involvement on the Board of Directors and Hospital Financial Performance

Implementation of the 2011 Therapeutic Activity Act: Will commercialization improve the financial performance of Polish hospitals?

The Therapeutic Activity Act that came into force on 1 July 2011 was aimed at achieving a large-scale transformation of public hospitals into Commercial Code companies. The change of the legal form, from a public entity to a for-profit company, was expected to improve the poor economic efficiency of the public hospital sector. However, the mere change of the legal form does not guarantee a better financial performance of hospitals and thus the success of the Act. In many cases, deep internal changes are needed to achieve improvements in the financial performance of particular hospitals. In addition, a set of other measures at the national and regional levels, such as the mapping of health needs of the population, have to accompany the legal transformations in order to improve the efficiency of the hospital sector. The recent slowdown in the rate of the transformations is another factor that renders the success of the Act uncertain.

Hospital financial performance in the recent recession and implications for institutions that remain financially weak.

The recent recession had a profound effect on all sectors of the US economy, including health care. We examined how private hospitals fared through the recession and considered how changes in their financial health may affect their ability to respond to future industry challenges. We categorized 2,971 private short-term general medical or surgical hospitals (both nonprofit and for-profit) according to their pre-recession financial health and safety-net status, and we examined their operational status changes and operating and total financial margins during 2006-11. We found that hospitals that were financially weak before the recession remained so during and after the recession. The total margins of nonprofit hospitals (both safety-net and other institutions) declined in 2008 but returned to their pre-recession levels by 2011. The recession did not create additional fiscal pressure on hospitals that were previously financially weak or in safety-net roles. However, both groups continue to have notable financial deficiencies that could limit their abilities to meet the growing demands on the industry.

Factors Impacting Hospital Financial Performance in Taiwan Following Implementation of National Health Insurance

This research discusses factors influencing hospital performance following the implementation of Taiwan’s National Health Insurance scheme. Regression analysis showed that the out-patient revenue ratio and fixed assets ratio were significantly and positively associated with operating margin and return on fixed assets. Liability conditions and average length of stay were negatively associated with operating margin. Return on fixed assets was positively associated with the use of hi-tech equipment and negatively associated with average length of stay. Implications of findings and recommendations to improve the performance of Taiwan hospitals are discussed.

A Longitudinal Analysis of High Technology Medical Services and Hospital Financial Performance

This study examined the association between high-tech medical services and financial performance of U.S. hospitals by using the resource-based view of a firm. It was hypothesized that hospitals with a rare or large numbers (breadth) of high-tech medical services will experience better financial performance. Furthermore, it was hypothesized that registered nurse (RN) staffing mix and market competition would positively moderate the relationship between high-tech medi-cal services and financial performance. A longitudinal panel sample of 4,362 hospitals from 2005 to 2010 was used to assess the hypothesized relationships. Fixed effects regression models gen-erated results that supported the link between a larger breadth of high tech services and all of the financial performance measures including operating margin, operating expenses per inpatient day, total margin, and return on assets. The same association for the rare high-tech services was sup-ported for only operating margin (positive) and operating expenses (negative) in the same direc-tion that they were predicted. However, significant results for operating revenue (negative) were opposite to the predicted direction. The study did not find evidence for the presence of moderat-ing effects of RN staffing mix or competition.

Development of Financial Indicators of Hospital Performance

Purpose: To develop an appropriate set of financial performance indicators for use in Iranian hospitals. Methods: This study consists of three steps. At the first step, using a literature review and three focus group discussions, the financial indicators that had been deemed to be important measures of hospital financial performance were identified. As the second step, a multidisciplinary panel of experts rated the indicators via two-round Delphi technique. Through the third step, the panel assessed the indicators at one consensus meeting. Results: Among 102 indicators identified at the first step, 79 indicators were selected in the Delphi technique. In the panel consensus meeting, the positive consensus was achieved on the 34 indicators. Upon the experts’ opinion, eight indicators were added after few modifications and 13 new indicators were developed. Finally, 55 indicators were selected as financial indicators for assessing the hospital performance. Conclusion: This study developed a set of financial indicators for Iranian hospitals, that helps hospital managers to identify hospital financial trends over a period of time and compare their performance with peer hospitals. The information derived from these indicators, may guide plans and decisions to improve hospital financial performance.

Succession Planning and Financial Performance – Does Competition Matter?

The study used the Resource Based View framework to analyze the differential effect of succession planning on hospital financial performance based on market competition. A panel design was used comprising a national sample of hospitals in the United States for 2006-2010. Data were analyzed using multivariate linear regression with facility random effects. The study found a positive relationship between presence of succession planning and financial performance, with stronger relationship in competitive markets as compared to monopolistic markets. Practical implications and factors explaining the above relationship are discussed.

Interorganizational relationships and hospital financial performance: a resource-based perspective

This study follows a resource-based theory perspective and aims to analyze the interorganizational relationships between hospitals and outpatient physicians, and hospital financial performance. In the light of increasing interdependence among healthcare providers which has made the coordination of service provision more complex, such relationships could be considered a resource for hospitals that lead to higher performance. In this study, the results from a survey of medical directors were combined with financial performance indicators of their hospitals. The results show that having effective interorganizational relationships is positively associated with the hospital's profitability. This finding emphasizes the importance of an investment in interorganizational relationships from the hospital's point of view.

Can transformational programs aimed at improving hospital management, leadership, and productivity systems affect financial performance?

Introduction: Management, leadership, and productivity systems (MLPS) are some of the critical success factors of effective organizations and may be associated with hospital financial performance. As such, many hospitals aim to improve their MLPS and engage in transformational interventions or programs designed for this purpose. The objective of this study was to evaluate trends in financial key performance indicators (KPIs) for hospitals that underwent an MLPS transformational program and to benchmark these trends against matched peer hospitals. Methods: Target hospitals that completed an MLPS transformational program between 2006 and 2010 were identified in the GE Healthcare customer database. MLPS transformation was defined as substantial engagement (typically over a period of three years) in the disciplines of management, leadership, and/or productivity systems (e.g., programs aimed at performance excellence, process improvement, employee engagement, or operational rhythm). A national database of hospital information was obtained, including various demographic and organizational variables for a set of over 5,000 US-based hospitals and hospital systems. Financial KPIs indicative of hospital profitability and cost containment (operating margin and expense per discharge) for 2006 through 2010 were also obtained for the majority of hospitals. A total of 18 target hospitals (those that underwent MLPS transformation) had demographic and financial KPI data available, and each was matched to a peer group of US hospitals using demographic characteristics. Results: Most target hospitals had &gt; 200 beds (67%) and were urban (83%) teaching (67%) institutions located primarily in the South (50%) and Northeast (44%) of the US. The target hospitals were matched to nearly 3,000 peers (range 21 to 1,273 peers per target hospital). Median percent change in operating margin among target hospitals between 2006 and 2010 was 125%, indicating substantial improvement in overall financial performance. Median percent change in expense per discharge for target hospitals was less than 3%, suggesting that they did not experience substantial increase in discharge-related costs between 2006 and 2010. Most of the target hospitals performed better than the median hospital among their peer set of matched hospitals: 78% (14 of 18) demonstrated a higher percent change in operating margin than their respective median peer, and 72% (13 of 18) of the target hospitals outperformed their median peer with a lower percent change in expense per discharge. Conclusion: Overall, between 2006 and 2010, the target hospitals, having undergone an MLPS transformational program, demonstrated improvements in financial performance as measured by profitability and cost containment indicators, and a majority performed better than their peers. MLPS transformational programs may have the potential to improve hospital financial performance as demonstrated by this analysis of financial KPI trends.

The Influence of Ownership on Strategic Cost Management: Evidence from U.S. Hospitals

This paper empirically examines the influence of ownership on strategic cost management (SCM) and related performance consequences in the health care industry. The concept of SCM is proposed as a two-dimensional strategy construct: revenue enhancement and cost reduction. Revenue enhancement refers to the use of SCM instruments to improve the quality of current revenue streams and identify revenue growth opportunities, whereas cost reduction refers to the use of SCM instruments to identify operational inefficiencies and contain costs. Drawing upon property rights theory and prior accounting literature, we develop the hypotheses that predict the ownership type would affect the extent to which the hospital strategically manages revenues and costs of operation, leading to possible improvement in financial performance. We select certain performance measures that are commonly used in accounting and healthcare research to operationalize the extensive use of SCM revenue-enhancing and SCM cost reduction strategies. A two-stage analysis approach is employed to address potential endogenity issues commonly associated with the relationship between ownership and performance in accounting research (Larcker and Rusticus 2010). Using a sample from short-term general, acute care hospitals in the State of California, we find that the ownership type does play a significant role in the choice of SCM strategies along the dimension of revenue-enhancing and cost reduction across different types of hospitals. Moreover, there is strong evidence that the association between the extensive use of SCM strategies and hospital financial performance is a function of the “match” between SCM use and a hospital’s ownership type, operating characteristics, and market environment.

Nonoperating revenue and hospital financial performance

For many years, hospitals have relied on nonpatient care activities to complement patient care revenues and strengthen financial performance. For hospitals that lose money on patient care, nonpatient care revenues may mean the difference between net income and loss. Little is known currently, however, about whether nonpatient care revenues allow hospitals with negative patient care margins to offset their losses. The aims of this study are (a) to examine whether hospitals rely on income from nonpatient care activities to offset losses on patient care and (b) to identify characteristics of hospitals that are able to offset such losses. Data for this study came from the state of California. The sample consisted of not-for-profit and investor-owned short-term general acute care hospitals for the years 2003-2007. Descriptive statistics were used to compare hospitals with negative patient care margins that were able to offset patient care losses to hospitals that were unable to do so. Between 2003 and 2007, approximately 40% of study hospitals lost money on patient care. Of these, only 25% relied on nonpatient care income to offset losses. Hospitals that were able to offset patient care losses tended to be larger, not-for-profit organizations that were able to generate substantial shares of their total revenues from nonpatient care activities, in particular, charitable donations and financial investments. Despite claims that income from nonpatient care activities frequently allows hospitals to offset patient care losses, this study showed that only a small proportion of hospitals were able to do so. The financial viability of hospitals with negative patient care margins will thus depend on their ability to (a) deliver high-quality care profitably, (b) derive income from other operating activities, and (c) generate income from financial investments and engage in active development efforts to increase donations and gifts.

The effects of nurse staffing on hospital financial performance

Hospitals facing financial uncertainty have sought to reduce nurse staffing as a way to increase profitability. However, nurse staffing has been found to be important in terms of quality of patient care and nursing-related outcomes. Nurse staffing can provide a competitive advantage to hospitals and as a result of better financial performance, particularly in more competitive markets. In this study, we build on the Resource-Based View of the Firm to determine the effect of nurse staffing on total profit margin in more competitive and less competitive hospital markets in Florida. By combining a Florida statewide nursing survey with the American Hospital Association Annual Survey and the Area Resource File, three separate multivariate linear regression models were conducted to determine the effect of nurse staffing on financial performance while accounting for market competitiveness. The analysis was limited to acute care hospitals. Nurse staffing levels had a positive association with financial performance (β = 3.3, p = .02) in competitive hospital markets, but no significant association was found in less competitive hospital markets. Hospitals in more competitive hospital markets should reconsider reducing nursing staff, as these cost-cutting measures may be inefficient and negatively affect financial performance.