Does System Membership Enhance Financial Performance in Hospitals?

Abstract

While hospitals continue to join multi-institutional systems, empirical data on the benefits of system membership are ambiguous. This study examines the same 166 Florida hospitals in 1986 and 1992. System membership, in general, did not enhance financial returns (measured by operating margin, total margin, and return on assets) for the pooled data or for either year. In fact, a significant negative relationship is noted in 1986. However, when only hospitals affiliated with national systems (in this study, American Medical International, Hospital Corporation of America, or Humana) are analyzed, a positive statistically significant association is found for two of the above three profitability indicators for both the pooled data and for 1986. However, there was no statistically significant impact noted for 1992. Reasons for the apparent discrepancy in the impact of national versus local/regional systems on hospital financial performance and the apparent declining ability of national systems to generate above-average returns are explored.

Effects of Specialty Hospitals on the Financial Performance of General Hospitals, 1997–2004

“…To gain a better understanding of the overall extent to which the covariates explain variation in operating margins, we also estimated a random-effects operating margin model with the same regressors (results not shown). The random effects ''between'' R-squared was .19, which is consistent with crosssectional studies of hospital margins (Tennyson and Fottler 2000;Younis and Forgione 2005).…”

Interorganizational relationships and hospital financial performance: a resource-based perspective

“…This is consistent with Clement et al (1997), who found that the hospitals' cash flow was not influenced by membership in a strategic hospital alliance. However, our finding regarding hospital profitability is in line with the theoretical framework and consistent with previous studies (Bazzoli et al, 2000;Tennyson & Fottler, 2000). Effective relationships between hospitals and outpatient physicians may not only make sense from a medical point of view, but could also enable hospitals to operate more profitably.…”

“…We focused on four domains of financial performance that have been identified to explain most of the variance in overall hospital performance: profitability, liquidity, capital structure, and asset efficiency (Das, 2009;Pink, Daniel, McGillis Hall, & McKillop, 2007). These domains have also been analyzed in previous studies (Bazzoli et al, 2000;Tennyson & Fottler, 2000). For each of these domains, we chose one common indicator which will be described in the following (Preißler, 2008).…”

“…Focusing on financial performance, Clement et al (1997) could show that hospitals that were member in a strategic hospital alliance had a higher net revenue per discharge. Tennyson and Fottler (2000) found that membership in a hospital system was associated with higher financial performance, although this was only the case for nationally operating systems. In a study on hospital membership in health networks and health systems, Bazzoli, Chan, Shortell, and D'Aunno (2000) showed that those hospitals were most profitable that belonged to either a centralized health network or a moderately centralized health system.…”

Hospital Cost Efficiency and System Membership

“…Her application to 1990 American Hospital Association (AHA) data made a methodological contribution in its simultaneous determination of costs and system membership, thus controlling for potential selection bias. Tennyson and Fottler (2000) also found some evidence for improved financial performance for Florida hospitals that were members of national systems. Unlike the majority of previous researchers, these authors used a longitudinal design in reaching their conclusions.…”