Title: Hospital Ownership and Financial Performance: An Integrative Research Review
1Hospital Ownership and Financial Performance An
Integrative Research Review
- Academy Health Annual Research Meeting
- Boston, June 28, 2005
- Yu-Chu Shen
- Naval Postgraduate School and NBER
- Karen Eggleston, Joseph Lau, Christopher Schmid
- Tufts University
- Funded by grant 050953 under the Robert Wood
Johnson Foundations Changes in Health Care
Financing and Organization (HCFO) Initiative
2Research Objective
- Does ownership affect hospital financial
performance (cost, revenue, profit, efficiency)? - Competing theories with contrasting predictions
- Hundreds of empirical studies to date with
conflicting findings - policymakers have little clear evidence
- economics of ownership and behavior imperfectly
understood
3Scope of the Integrative Review
- Synthesize the main findings of the empirical
literature between January 1990 and July 2004 on
hospital ownership and performance (published or
unpublished) - Examine multivariate empirical studies of US
acute general short stay hospitals - Examine studies that compare differences between
for-profits and nonprofits, between nonprofits
and government, or both.
4Scope of the Integrative Review
- We start with 1434 potentially relevant studies,
and end up with 141 studies for the integrative
review. - Focus on four broad categories of performance
measures - financial performance (cost, revenue, profit, and
efficiency) - quality / patient outcomes
- uncompensated care or community benefits
- Staffing
5Presentation Is Focused On Four Financial Measures
 Number of studies analyzed the outcome Number of articles with usable information
Outcomes Reviewed  Â
Operating cost 22 19
Patient revenue and returns on assets 14 11
Profit margin 17 14
Cost and technical efficiency 19 15
6Integrative Review Research Questions
- What is the magnitude of the difference between
NFP and FPwhat is the effect size? - How precise or reliable is this estimated effect
size? - How do differences in analytic methods and other
study features affect the estimates of effect
size?
7Categorizing Analytical Methods
- Three types of methodology rigor
- Type 3 if a study meets both of the following
conditions - (a) uses panel estimation or explicitly
accounts for potential selection problem - (b) includes two of the following three sets of
controls patient level, hospital level, market
level - Type 2 if meets EITHER (a) or (b)
- Type 1 if meets NEITHER (a) nor (b)
8Cost Summary of N-F Effect Size By Method Types
Method Type 1
Method Type 2
Method Type 3
FP is more costly
FP is less costly
9Cost Summary of N-F Effect Size By Covered Region
Single state sample
National sample
FP is more costly
FP is less costly
10Revenue Summary of N-F Effect Size By Method Type
Method Type 1
Method Type 2
Method Type 3
FP generates more revenue
FP generates less revenue
11Revenue Summary of N-F Effect Size By Covered
Region
Single state sample
National sample
FP generates more revenue
FP generates less revenue
12Profit Margin Summary of N-F Effect Size By
Method Type
Method Type 1
Method Type 2
Method Type 3
FP earns higher profit
FP earns lower profit
13Profit Margin Summary of N-F Effect Size By
Covered Region
Single state sample
National sample
FP earns higher profit
FP earns lower profit
14Efficiency Summary of N-F Effect Size By Covered
Region
Single state sample
National sample
FP is more efficient
FP is less efficient
15What Do We Learn? (1)
- Evidence is pretty conclusive regarding revenue
and profit margins - Most studies find for-Profits earn more revenue
(per admission) and have higher profit margins - There is little evidence of any difference in
cost between FP and NFP hospitals - Evidence is mixed regarding efficiency.
- Single state (Florida) analyses find FP more
efficient, national analyses tend to find FP less
efficient.
16What Do We Learn? (2)
- Functional forms and analytical methods matter
- Weaker methods and functional forms tend to
predict larger differences between
not-for-profits and for-profits - National samples tend to produce more
conservative estimates of effect size than single
state analyses