Comparison of efficiency and profitability of investor-owned multihospital systems with not-for-profit hospitals

A Kitchen with too Many Cooks: Factors Associated with Hospital Profitability

“…Previous studies have investigated the determinants of hospital profitability at the (1) organizational (e.g., teaching status, hospital size, ownership, system status), (2) managerial (e.g., age of plant, debt utilization, service index, labor intensity), (3) patient (e.g., Medicaid mix, Medicare mix, uncompensated care mix), and (4) market levels (e.g., physician density, patient income, hospital concentration) [1][2][3][4][5][6][7][8][9]13,14,[16][17][18][19][20][21]. Some studies focus on a few individual relevant factors such as bed size, ownership, or system affiliation [1][2][3][4][5]14,[18][19][20], while others provide more comprehensive picture of drivers of hospital profitability [6,7,9,13,16,17,21].…”

“…Some studies focus on a few individual relevant factors such as bed size, ownership, or system affiliation [1][2][3][4][5]14,[18][19][20], while others provide more comprehensive picture of drivers of hospital profitability [6,7,9,13,16,17,21]. These studies have implications for policy making and practice relevant for improving the financial viability of hospitals.…”

“…Nonprofit ownership provides socially desirable goods or services, the delivery of which is funded by the recipient constituencies or donors. Despite the clear distinction among three types of hospitals, there are very limited studies to date on how the relationship between the operating factors and profitability depends on hospital ownership types, or they found no significant effect of ownership type [1,3,5,8,9]. In most cases, the variable of ownership type has been included as one of the independent or control variables in the previous literature [2,4,6,13,16,17,20,21].…”

“…With its importance, many scholars have examined several financial outcomes of hospitals such as revenue, efficiency, and profitability over the last several decades [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20]. For instance, they have found that hospital efficiency is determined by several factors such as scope of service, occupancy, ownership, and information technology.…”

“…For instance, they have found that hospital efficiency is determined by several factors such as scope of service, occupancy, ownership, and information technology. [5,11,12,14,17]. Additionally, many existing studies discuss the individual relevant factors of profitability at various levels such as organizational, managerial, patient, and market levels [1][2][3][4][5][6][7][8][9]13,14,[16][17][18][19][20][21].…”