A market, operation, and mission assessment of large rural for-profit hospitals with positive cash flow

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.

Hospital factors associated with higher costs in pediatric blunt abdominal trauma: A national study

BACKGROUND/PURPOSE

Our objective was to evaluate hospital factors, including children's hospital status, associated with higher costs for blunt solid organ pediatric abdominal trauma.

METHODS

We queried the 2012 Healthcare Cost and Utilization Project (HCUP) Kid's Inpatient Database (KID) for patients 18 years or younger with low-grade and high-grade blunt abdominal trauma. We calculated total hospital costs and adjusted cost ratios (CR) controlling for patient and hospital-level characteristics.

RESULTS

The 2012 KID included 882 low-grade and 222 high-grade pediatric abdominal trauma patients. Median (interquartile range) per hospitalization costs were similar at children's and nonchildren's hospitals for both low-grade (children's = $6575 [$4333-$10,862], nonchildren's $7027 [$4230-$12,219] p = 0.47) and high-grade (children's = $10,984 [$6211- $20,007] nonchildren's $10,156 [$5439-$18,404] p = 0.55) groups. Adjusted cost ratios demonstrated higher costs in the West and among investor owned hospitals for low-grade and high-grade injuries, respectively. Costs at rural hospitals were higher in both groups (low-grade CR = 2.35 95% CI 2.02, 2.74, high-grade CR = 2.78 95% CI 2.13, 3.63) compared to urban teaching hospitals. Cost ratios did not differ based on children's hospital status.

CONCLUSION

Hospital costs were similar for children's and nonchildren's hospitals caring for pediatric abdominal trauma. Costs at rural hospitals are higher and may suggest financial instability or nonstandardized care of pediatric trauma patients.

LEVEL OF EVIDENCE

III.

Hospitals’ Financial Health in Rural and Urban Areas in Poland: Does It Ensure Sustainability?

Literature review suggests that rural hospitals are in the worst financial conditions due to several factors: They are smaller, located in remote areas, and they provide less specialized services due to their problems with employing well-qualified staff. We decided to check whether it is true in the case of Polish hospitals. Based on the literature review, we have assumed that rural hospitals have less favorable financial conditions. In order to verify this assumption, we use seven indicators of financial health as well as a synthetic measure of financial condition. We have found that, in fact, there is no difference in financial condition between rural and urban hospitals, or even that the financial health of rural hospitals is better if we employ the synthetic measure. Additionally, we have found that the form of activity can be a crucial driver of better financial performance. The concept of rural sustainability is supported by good financial conditions of rural hospitals, which helps to provide better access to medical services for inhabitants of rural areas.

Does efficiency and quality of care affect hospital closures?

In recent decades, a large number of hospitals in Pennsylvania and across the United States have been forced to close entirely, or to transform their beds for alternative uses including outpatient care. Hospital closures have severe repercussions for the stakeholders. A better understanding of hospital closures could help take corrective measures to alleviate the adverse impact closures have on communities. Using Pennsylvania Department of Health data compiled from various sources, we address the following questions: Are less efficient hospitals less likely to survive in the long run? What are the effects of quality of care on hospital closures? Does teaching status and location (urban or rural) have any impact on the probability of hospital closure? The result demonstrates several factors of varying significance affect hospital closures/survivals. Hospitals with higher ratio of registered nurses per bed, higher operating margin, lower percentage of revenues from Medicare and Medicaid, and lower competition were less likely to close. Efficiency measures such as DEA efficiency, cost per patient day, and cost per discharge were not found to have a significant impact on hospital closures. The results suggest that hospital administrators may focus more on quality of care and less on cost reduction and efficiency.

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.

Economic effects of smoke-free laws on rural and urban counties in Kentucky and Ohio

INTRODUCTION

Numerous empirical studies have examined the influence of smoke-free legislation on economic activity, with most finding a null effect. The influence could possibly differ in rural areas relative to urban areas due to differing rates of smoking prevalence and access to prevention and treatment programs. Furthermore, the discussion of the effectiveness of smoke-free laws has been extended to consider local ordinances relative to statewide laws. This study examines these issues using 21 local laws in Kentucky and the Ohio statewide smoke-free law.

METHODS

The number of employees, total wages paid, and number of reporting establishments in all hospitality and accommodation services in Kentucky and Ohio counties were documented, beginning the first quarter 2001 and ending the last quarter of 2009. A generalized estimating equation time-series design is used to estimate the impact of local and state smoke-free laws in Kentucky and Ohio rural and urban counties.

RESULTS

There is no evidence that the economies in Kentucky counties were affected in any way from the implementation of local smoke-free laws. There was also no evidence that total employment or the number of establishments was influenced by the statewide law in Ohio, but wages increased following the implementation of the law. Furthermore, there is no evidence that either rural or urban counties experienced a loss of economic activity following smoke-free legislation.

CONCLUSIONS

The study finds no evidence that local or state smoke-free legislation negatively influences local economies in either rural or urban communities.

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

OBJECTIVE

To test whether nonprofit, for-profit, or government hospital ownership affects medical service provision in rural hospital markets, either directly or through the spillover effects of ownership mix.

DATA SOURCES/STUDY SETTING

Data are from the American Hospital Association, U.S. Census, CMS Healthcare Cost Report Information System and Prospective Payment System Minimum Data File, and primary data collection for geographic coordinates. The sample includes all nonfederal, general medical, and surgical hospitals located outside of metropolitan statistical areas and within the continental United States from 1988 to 2005.

STUDY DESIGN

We estimate multivariate regression models to examine the effects of (1) hospital ownership and (2) hospital ownership mix within rural hospital markets on profitable versus unprofitable medical service offerings.

PRINCIPAL FINDINGS

Rural nonprofit hospitals are more likely than for-profit hospitals to offer unprofitable services, many of which are underprovided services. Nonprofits respond less than for-profits to changes in service profitability. Nonprofits with more for-profit competitors offer more profitable services and fewer unprofitable services than those with fewer for-profit competitors.

CONCLUSIONS

Rural hospital ownership affects medical service provision at the hospital and market levels. Nonprofit hospital regulation should reflect both the direct and spillover effects of ownership.

A financial ratio analysis of for-profit and non-profit rural referral centers

CONTEXT

National financial data show that rural referral center (RRC) hospitals have performed well financially. RRC hospitals' median cash flow margin ratio was 10.04% in 2002 and grew to 11.04% in 2004.

PURPOSE

The aim of this study is to compare the ratio analysis of key operational and financial performance measures of for-profit RRCs to those of private, non-profit RRCs.

METHODS

To control for accounting aberrations within a given year, we selected RRCs that reported 3 consecutive fiscal years of Centers for Medicare and Medicaid Services (CMS) cost report data, starting with fiscal year 2004 and ending with fiscal year 2006. Given a limited sample size of 28 for-profit RRCs and 127 non-profits, we used the non-parametric median test to assess median differences in operational and key financial measures between the 2 groups.

FINDINGS

For-profit RRCs treated less complex cases and reported fewer discharges per bed and fewer occupied beds than did non-profits. However, for-profit RRCs staffed their beds with fewer full-time-equivalent (FTE) personnel and served a higher proportion of Medicaid patients. For-profit RRCs generated operating cash flow margins in excess of 19%, compared to only 8.1% for non-profits, and maintained newer plant and equipment.

CONCLUSION

For-profit RRCs generated a substantially higher cash flow margin by controlling their operating costs.