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Hospital Ownership and Financial Performance: An Integrative Research Review

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Title: Ownership and Contracting for Health Care Author: Wendy Wyatt Last modified by: Yu-Chu Shen Created Date: 7/31/2000 2:40:22 PM Document presentation format – PowerPoint PPT presentation

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Title: Hospital Ownership and Financial Performance: An Integrative Research Review


1
Hospital 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

2
Research 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

3
Scope 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    unpublished)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.

4
Scope 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

5
Presentation Is Focused On Four Financial Measures
  Number of studies analyzed the outcome Number of articles with usable information
Outcomes Reviewed    
Operating cost 22 19
Patient revenue and returns on assets 14 11
Profit margin 17 14
Cost and technical efficiency 19 15
6
Integrative 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?

7
Categorizing 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)

8
Cost 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
9
Cost Summary of N-F Effect Size By Covered Region
Single state sample
National sample
FP is more costly
FP is less costly
10
Revenue 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
11
Revenue Summary of N-F Effect Size By Covered
Region
Single state sample
National sample
FP generates more revenue
FP generates less revenue
12
Profit 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
13
Profit Margin Summary of N-F Effect Size By
Covered Region
Single state sample
National sample
FP earns higher profit
FP earns lower profit
14
Efficiency Summary of N-F Effect Size By Covered
Region
Single state sample
National sample
FP is more efficient
FP is less efficient
15
What 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.

16
What 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
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