Rural hospital ownership: medical service provision, market mix, and spillover effects

Service mix and financial performance in rural hospitals: A contingency theory perspective

BACKGROUND

Rural hospitals are increasingly at risk of closure. Closure reduces the availability of hospital care in rural areas, resulting in a disparity in health between rural and urban citizens, and it has broader economic impacts on rural communities as rural hospitals are often large employers and are vital to recruiting new businesses to a community. To combat the risk of closure, rural hospitals have sought partnerships to bolster financial performance, which often results in a closure of services valuable to the community, such as obstetrics and certain diagnostic services, which are viewed as unprofitable. This can lead to poor health outcomes as community members are unable to access care in these areas.

PURPOSE

In this article, we explore rural hospital service offerings and financial performance, with an aim to illuminate if specific service offerings are associated with positive financial performance in a rural setting.

METHODS

Our study used hospital organization data, as well as county-level demographics with periods of analysis from 2015 and 2019. We employed a pooled cross-sectional regression analysis with robust standard errors examining the association between total margin and service lines among rural hospitals in the United States.

RESULTS

The findings suggest that some services deemed unprofitable in urban and suburban hospital settings-such as obstetrics and drug/alcohol rehabilitation-are associated with higher margins in rural hospitals. Other unprofitable service lines-such as psychiatry and long-term care-are associated with lower margins in rural hospitals.

CONCLUSION

Our results suggest the need of rural hospitals to choose services that align with environmental circumstances to maximize financial performance.

PRACTICE IMPLICATION

Hospital administrators in rural settings need to take a nuanced look at their environmental and organizational specifics when deciding upon the service mix. Generalizations regarding profitability should be avoided to maximize financial performance.

What condition leads to an unreasonable pharmaceutical price? Impact research on the effect of medical service provision on pharmaceutical price regulation based on fuss-set QCA

Given that the pharmaceutical market has experienced severe market failures, it is necessary that we regulate pharmaceutical prices for many countries. Toward ensuring that pharmaceutical price regulation is efficient, this study investigated the antecedents that lead to an unreasonable pharmaceutical price. Based on 33 case-study countries, this study utilized QCA to analyze the conditional configuration of unreasonable pharmaceutical prices from the perspective of medical service provision. The results showed that the causes of unreasonable pharmaceutical prices are configured by medical service provision, especially cost compensation systems and payment mechanism. This study's conclusions contribute to the research on pharmaceutical price regulation and the institution of medical service provision.

Emergency departments in the United States treating high proportions of patients with ambulatory care sensitive conditions: a retrospective cross-sectional analysis

BACKGROUND

One in nine emergency department (ED) visits by Medicare beneficiaries are for ambulatory care sensitive conditions (ACSCs). This study aimed to examine the association between ACSC ED visits to hospitals with the highest proportion of ACSC visits ("high ACSC hospitals) and safety-net status.

METHODS

This was a cross-sectional study of ED visits by Medicare fee-for-service beneficiaries ≥ 65 years using 2013-14 claims data, Area Health Resources File data, and County Health Rankings. Logistic regression estimated the association between an ACSC ED visit to high ACSC hospitals, accounting for individual, hospital, and community factors, including whether the visit was to a safety-net hospital. Safety net status was measured by Disproportionate Share Hospital (DSH) index patient percentage; public hospital status; and proportion of dual-eligible beneficiaries. Hospital-level correlation was calculated between ACSC visits, DSH index, and dual-eligible patients. We stratified by type of ACSC visit: acute or chronic.

RESULTS

Among 5,192,729 ACSC ED visits, the odds of visiting a high ACSC hospital were higher for patients who were Black (1.37), dual-eligible (1.18), and with the highest comorbidity burden (1.26, p < 0.001 for all). ACSC visits had increased odds of being to high ACSC hospitals if the hospitals were high DSH (1.43), served the highest proportion of dual-eligible beneficiaries (2.23), and were for-profit (relative to non-profit) (1.38), and lower odds were associated with public hospitals (0.64) (p < 0.001 for all). This relationship was similar for visits to high chronic ACSC hospitals (high DSH: 1.59, high dual-eligibility: 2.60, for-profit: 1.41, public: 0.63, all p < 0.001) and to a lesser extent, high acute ACSC hospitals (high DSH: 1.02; high dual-eligibility: 1.48, for-profit: 1.17, public: 0.94, p < 0.001). The proportion of ACSC visits at all hospitals was weakly correlated with DSH proportion (0.2) and the proportion of dual-eligible patients (0.29), and this relationship was also seen for both chronic and acute ACSC visits, though stronger for the chronic ACSC visits.

CONCLUSION

Visits to hospitals with a high proportion of acute ACSC ED visits may be less likely to be to hospitals classified as safety net hospitals than those with a high proportion of chronic ACSC visits.

Hospital Service Offerings Still Differ Substantially By Ownership Type

Nonprofit, for-profit, and government hospitals are all more likely to offer services when they are relatively profitable than when they are relatively unprofitable. However, for-profit hospitals are considerably more likely than others to provide services based on profitability. After hospital and market characteristics are adjusted for, nonprofit hospitals offer relatively unprofitable services more than for-profit hospitals and less than government hospitals. Profitable services typically exhibit the opposite pattern. For-profit hospitals are also more likely to adopt or discontinue services consistent with changes in service profitability than are nonprofits, which in turn are more likely to do so than government hospitals. These results are similar to those we found before passage of the Affordable Care Act, when many more patients were uninsured. Policy makers and researchers tend to focus on whether nonprofit hospitals provide sufficient free care to justify tax benefits, thereby overlooking the significance of ownership for service provision, which likely has critical health and spending consequences.

Capital Expenditures Increased at Rural Hospitals That Merged Between 2012 and 2015

EXECUTIVE SUMMARY

The number of rural hospital mergers has increased substantially in recent years. A commonly reported reason for merging is to increase access to capital. However, no empirical evidence exists to show whether capital expenditures increased at rural hospitals after a merger. We used a difference-in-differences approach to determine whether total capital expenditures changed at rural hospitals after a merger. The comparison group (rural hospitals that did not merge during the 2012 through 2015 study period) was weighted using inverse probability of treatment weights. The key outcome measure was logged total capital expenditures.Merging resulted in a 26% increase in capital expenditures and also was associated with a significant improvement in plant age. The postmerger improvement in plant age may have been partially attributable to merger-related accounting changes and partially attributable to increased capital expenses, possibly on long-term asset renovations and replacement.These findings suggest that through mergers, rural hospital board members and executives who have accepted or are considering a merger may improve a hospital's ability to increase capital expenditures. Further, increased capital investments in rural hospitals may be an important signal to the community that the acquirer intends to keep the rural hospital open and continue providing some volume and level of services within the community. Future research should determine how capital is spent after a merger.

For-profit hospitals have a unique opportunity to serve as anchor institutions in the U.S

Hospitals serve as anchor institutions in many U.S. communities and make contributions to bolster population health and reduce preventable death. Most studies to date have focused on nonprofit hospitals, but there may be significant opportunity for for-profits to fill this role in both urban and rural communities. Using 2017-2018 data, we calculated descriptive statistics and a multivariate regression model to assess economic and health characteristics for all U.S. counties that contain for-profit as compared to nonprofit or public hospitals (n = 4,622). After controlling for hospital and county characteristics, we found a significant and positive relationship between for-profit hospital presence and higher county unemployment, higher uninsured rates, and the number of residents reporting poor/fair health. For-profit hospitals were also less likely to be located in states that had expanded Medicaid or which had certificate-of-need laws. Our findings suggest that there is substantial opportunity for for-profit hospitals to serve as anchor institutions in many U.S. communities, despite this label more traditionally being applied to nonprofit hospitals. Given that there is not currently a regular reporting mechanism for documenting the community health contributions of for-profit hospitals, policymakers and researchers should evaluate the current state of these contributions and develop incentives to encourage more anchor activities to benefit economically vulnerable communities in the U.S.

Do Hospitals Providing Telehealth in Emergency Departments Have Lower Emergency Department Costs?

Background: Since 2003, the University of Mississippi Medical Center has operated a robust telehealth emergency department (ED) network, TelEmergency, which enhances access to emergency medicine-trained physicians at participating rural hospitals. TelEmergency was developed as a cost-control measure for financially constrained rural hospitals to improve access to quality, emergency care. However, the literature remains unclear as to whether ED telehealth services can be provided at lower costs compared with traditional in-person ED services. Introduction: Our objective was to empirically determine whether TelEmergency was associated with lower ED costs at rural hospitals when compared with similar hospitals without TelEmergency between 2010 and 2017. Materials and Methods: A panel of data for 2010-2017 was constructed at the hospital level. Hospitals with TelEmergency (n = 14 hospitals; 112 hospital-years) were compared with similar hospitals that did not use TelEmergency from Arkansas, Georgia, Mississippi, and South Carolina (n = 102; 766 hospital-years), matched using Coarsened Exact Matching. The relationship between total ED costs and treatment (e.g., participation in TelEmergency) was predicted using generalized estimating equations with a Poisson distribution, a log link, an exchangeable error term, and robust standard errors. Results: After controlling for ownership type, critical access hospital status, year, and size, TelEmergency was associated with an estimated 31.4% lower total annual ED costs compared with similar matched hospitals that did not provide TelEmergency. Conclusions: TelEmergency utilization was associated with significantly lower total annual ED costs compared with similarly matched hospitals that did not utilize TelEmergency. These findings suggest that access to quality ED care in rural communities can occur at lower costs.

The strange case of less C-sections: Hospital ownership, market concentration, and DRG-tariff regulation

We evaluate the relationship between hospital ownership and responses to a policy providing large financial incentives for vaginal deliveries and financial disincentives for C-sections. We compare for-profit, nonprofit, and public hospitals operating in a public health care system organized according to the quasi-market model. We first theoretically show that hospital ownership matters insofar different hospitals are characterized by different ethical preferences. We also show that competition makes ownership less important. We then consider the case study of Lombardy in Italy. We exploit spatial variation in hospital ownership and in market concentration at the local level to evaluate the relationship between ownership and the probability of C-section. According to theory, empirical results strongly suggest that competitive pressures from alternative providers tend to homogenize behaviors. However, in local monopolies, in presence of a strong monetary incentive toward vaginal deliveries, we do observe less C-section from private for-profit hospitals than from public and private nonprofit hospitals, especially when C-sections are medically appropriate.

Rural Hospital Mergers Increased Between 2005 and 2016-What Did Those Hospitals Look Like?

The objective of this study is to determine whether key hospital-level financial and market characteristics are associated with whether rural hospitals merge. Hospital merger status was derived from proprietary Irving Levin Associates data for 2005 through 2016 and hospital-level characteristics from HCRIS, CMS Impact File Hospital Inpatient Prospective Payment System, Hospital MSA file, AHRF, and U.S. Census data for 2004 through 2016. A discrete-time hazard analysis using generalized estimating equations was used to determine whether factors were associated with merging between 2005 and 2016. Factors included measures of profitability, operational efficiency, capital structure, utilization, and market competitiveness. Between 2005 and 2016, 11% (n = 326) of rural hospitals were involved in at least one merger. Rural hospital mergers have increased in recent years, with more than two-thirds (n = 261) occurring after 2011. The types of rural hospitals that merged during the sample period differed from nonmerged rural hospitals. Rural hospitals with higher odds of merging were less profitable, for-profit, larger, and were less likely to be able to cover current debt. Additional factors associated with higher odds of merging were reporting older plant age, not providing obstetrics, being closer to the nearest large hospital, and not being in the West region. By quantifying the hazard of characteristics associated with whether rural hospitals merged between 2005 and 2016, these findings suggest it is possible to determine leading indicators of rural mergers. This work may serve as a foundation for future research to determine the impact of mergers on rural hospitals.

Public Trust in Physicians-Health Care Commodification as a Possible Deteriorating Factor: Cross-sectional Analysis of 23 Countries

Trust in physicians has declined, and surveys of public opinion show a poor level of public trust in physicians. Commodification of health care has been speculated as a plausible driving force. We used cross-national data of 23 countries from the International Social Survey Programme 2011 to quantify health care commodification and study its role in the trust that patients generally place in physicians. A modified health care index was used to quantify health care commodification. There were 34 968 respondents. A question about the level of general trust in physicians and a 4-item “general trust in physicians” scale were used as our major and minor outcomes. The results were that compared with those in the reference countries, the respondents in the health care–commodified countries were approximately half as likely to trust physicians (odds ratio: 0.47, 95% confidence interval [CI]: 0.31-0.72) and scored 1.13 (95% CI: 1.89-0.37) less on the general trust scale. However, trust in physicians in the health care–decommodified countries did not differ from that in the reference countries. In conclusion, health care commodification may play a meaningful role in the deterioration of public trust in physicians.

Effect of Hospital Ownership on Outcomes After Left Ventricular Assist Device Implantation in the United States

BACKGROUND

We evaluated the effects of hospital ownership, classified into three tiers (nonfederal government, not-for-profit, and for-profit hospitals), on in-hospital outcomes after implantation of continuous-flow left ventricular assist devices (LVADs) in the United States from 2009 to 2014.

METHODS

Data from the National Inpatient Sample were used to calculate annual national estimates in utilization, in-hospital mortality, major complications, lengths of stay, cost of hospitalization, and disposition at discharge for years 2009 to 2014. Complications were calculated using patient safety indicators and International Classification of Diseases, Ninth Revision, Clinical Modification codes.

RESULTS

Of the 3,571 patients (weighted, 17,547) with LVAD implants in the United States between 2009 and 2014, 82.1% were in not-for-profit hospitals, 15.6% in nonfederal government hospitals, and 2.3% in for-profit hospitals. In-hospital mortality significantly decreased over time only in not-for-profit hospitals by average annual change of -7.4% (p = 0.001) and was higher in for-profit hospitals than other tiers of hospital ownership. Our analysis did not suggest any differences in postoperative complications among different hospital ownership types. LVAD implantation in nonfederal government hospitals was associated with the highest cost ($227,930; interquartile range [IQR], $173,259 to $301,566) and implantation in for-profit hospitals was associated with lower cost ($148,406; IQR, $133,149 to $199,317; p = 0.03). The length of stay was similar across the three tiers of hospital ownership. Nonroutine discharge was significantly more frequent in not-for-profit hospitals (73.6%; IQR 69.5% to 77.7%) compared with nonfederal government (48.8%; IQR, 42.4% to 55.1%) and for-profit (59.8%; IQR, 43.0% to 76.6%) hospitals (p < 0.001).

CONCLUSIONS

Disparities in in-hospital mortality, cost, and disposition exist between various hospital ownerships during admission for LVAD implant.

A Longitudinal Investigation of Willingness to Pay for Health Insurance in Germany

OBJECTIVE

To investigate factors affecting willingness to pay (WTP) for health insurance of older adults in a longitudinal setting in Germany.

DATA SOURCES

Survey data from a cohort study in Saarland, Germany, from 2008-2010 and 2011-2014 (n₁  = 3,124; n₂  = 2,761) were used.

STUDY DESIGN

Panel data were taken at two points from an observational, prospective cohort study.

DATA COLLECTION

WTP estimates were derived using a contingent valuation method with a payment card. Participants provided data on sociodemographics, lifestyle factors, morbidity, and health care utilization.

PRINCIPAL FINDINGS

Fixed effects regression models showed higher individual health care costs to increase WTP, which in particular could be found for members of private health insurance. Changes in income and morbidity did not affect WTP among members of social health insurance, whereas these predictors affected WTP among members of private health insurance.

CONCLUSIONS

The fact that individual health care costs affected WTP positively might indicate that demanding (expensive) health care services raises the awareness of the benefits of health insurance. Thus, measures to increase WTP in old age should target at improving transparency of the value of health insurances at the moment when individual health care utilization and corresponding costs are still relatively low.

Competitive Spillovers and Regulatory Exploitation by Skilled Nursing Facilities

Typically, research on the effect of ownership has considered health care providers in isolation of competitive interaction from other firms. This analysis considers how the selection of Medicare reimbursement codes for skilled nursing facilities varies by ownership and is influenced by the competitive spillovers from market dominance of for-profit institutions. We find evidence that not-for-profits are less likely to code patients into the highest reimbursement categories. Further, as the market becomes dominated by for-profits, both for-profit and not-for-profits increase the share of patients in these high reimbursement categories.

Why Are Obstetric Units in Rural Hospitals Closing Their Doors?

OBJECTIVES

To understand hospital- and county-level factors for rural obstetric unit closures, using mixed methods.

DATA SOURCES

Hospital discharge data from Healthcare Cost and Utilization Project's Statewide Inpatient Databases, American Hospital Association Annual Survey, and Area Resource File for 2010, as well as 2013-2014 telephone interviews of all 306 rural hospitals in nine states with at least 10 births in 2010. Via interview, we ascertained obstetric unit status, reasons for closures, and postclosure community capacity for prenatal care.

STUDY DESIGN

Multivariate logistic regression and qualitative analysis were used to identify factors associated with unit closures between 2010 and 2014.

PRINCIPAL FINDINGS

Exactly 7.2 percent of rural hospitals in the study closed their obstetric units. These units were smaller in size, more likely to be privately owned, and located in communities with lower family income, fewer obstetricians, and fewer family physicians. Prenatal care was still available in 17 of 19 communities, but local women would need to travel an average of 29 additional miles to access intrapartum care.

CONCLUSIONS

Rural obstetric unit closures are more common in smaller hospitals and communities with a limited obstetric workforce. Concerns about continuity of rural maternity care arise for women with local prenatal care but distant intrapartum care.

Market competition, ownership, payment systems and the performance of health care providers - a panel study among Finnish occupational health services providers

Many health care reforms rely on competition although health care differs in many respects from the assumptions of perfect competition. Finnish occupational health services provide an opportunity to study empirically competition, ownership and payment systems and the performance of providers. In these markets employers (purchasers) choose the provider and prices are market determined. The price regulation of public providers was abolished in 1995. We had data on providers from 1992, 1995, 1997, 2000 and 2004. The unbalanced panel consisted of 1145 providers and 4059 observations. Our results show that in more competitive markets providers in general offered a higher share of medical care compared to preventive services. The association between unit prices and revenues and market environment varied according to the provider type. For-profit providers had lower prices and revenues in markets with numerous providers. The public providers in more competitive regions were more sensitive to react to the abolishment of their price regulation by raising their prices. Employer governed providers had weaker association between unit prices or revenues and competition. The market share of for-profit providers was negatively associated with productivity, which was the only sign of market spillovers we found in our study.

The financial performance of rural hospitals and implications for elimination of the Critical Access Hospital program

PURPOSE

To compare the financial performance of rural hospitals with Medicare payment provisions to those paid under prospective payment and to estimate the financial consequences of elimination of the Critical Access Hospital (CAH) program.

METHODS

Financial data for 2004-2010 were collected from the Healthcare Cost Reporting Information System (HCRIS) for rural hospitals. HCRIS data were used to calculate measures of the profitability, liquidity, capital structure, and financial strength of rural hospitals. Linear mixed models accounted for the method of Medicare reimbursement, time trends, hospital, and market characteristics. Simulations were used to estimate profitability of CAHs if they reverted to prospective payment.

FINDINGS

CAHs generally had lower unadjusted financial performance than other types of rural hospitals, but after adjustment for hospital characteristics, CAHs had generally higher financial performance.

CONCLUSIONS

Special payment provisions by Medicare to rural hospitals are important determinants of financial performance. In particular, the financial condition of CAHs would be worse if they were paid under prospective payment.