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PubMed2000

Hospital ownership, performance, and outcomes: assessing the state-of-the-science.

OBJECTIVE: This study 1) identified the research evidence; 2) assessed the state-of-the-science surrounding hospital ownership, performance, and outcomes in acute care hospitals in the United States; and 3) identified measurable components of hospital performance and outcomes for the organization, patient, and community. BACKGROUND: As the size of the nonprofit sector decreases and the size of the for-profit sector increases, hospital ownership warrants examination. Most research has focused on either ownership and performance or ownership and outcomes, rather than the potential interaction of all three variables. METHODS: A comprehensive, computerized search of the healthcare research literature yielded 69 data-based references published between 1985 and 1999. Coding sheets were developed to abstract the articles. Analysis involved synthesizing the research evidence for each of the three major variables and their components. RESULTS: Hospital ownership has an impact on hospital performance in relation to system operations; costs, prices, and financial management practices; and personnel issues. Organizational outcomes are similar among hospital ownership types in relation to increasing administrative costs and overall mediocre efficiency. Organizational outcomes differ among hospital ownership types in relation to nursing staff mix and professional satisfaction. The association of hospital ownership with patient outcomes varies depending on the dimension measured. The evidence is mixed or inconclusive regarding hospital ownership and access to care, morbidity, and mortality. The association of hospital ownership and adverse events is consistently supported. Hospital ownership status has an impact on the type and magnitude of community benefits. Differences among the three hospital ownership types are minimized in a competitive market. CONCLUSIONS: This study reinforces the position that nurse researchers need to include hospital ownership as an important structural variable in their studies of hospital-based nursing. Examining the conceptual links between ownership, performance, and outcomes requires the integration of macro-level and micro-level theory.

Community-Institutional Relations↗
PubMed1988

Financial risk and hospital cost for elderly patients. Age- and non-age-stratified medical diagnosis related groups.

The purpose of this study was to analyze hospital resource consumption for Medicare patients in non-age- and age-stratified medical diagnosis related groups (DRGs). This study of patients in 74 non-age-stratified DRGs (N = 3643) and 113 age-stratified DRGs (N = 2898) demonstrated that older medical patients (usually greater than or equal to 75 to 80 years of age) had (on average) higher total hospital costs, a longer hospital length of stay, more diagnoses per patient, a greater percentage of outliers, and a higher mortality compared with younger patients in these same DRGs. These findings raise the question of the equity of DRG payment vis-à-vis older Medicare patients in both non-age- and age-stratified medical DRGs. Financial disincentives to treat older medical patients may limit both their access and quality of care in the future.

Aged↗
PubMed1985

The financial effects of emergency department-generated admissions under prospective payment systems.

The purpose of this study was to assess the financial impact (revenues vs expenses) as measured by hospital charges and costs vs diagnosis-related group (DRG) revenues of prospective payment systems on emergency department-generated admissions for a large teaching hospital under two payment systems: Medicare and an all-payor system. All emergency department admissions were analyzed for the years 1983 (N = 4,273) and 1984 (N = 4,125) under both systems, using standard DRG methodology. Our findings were as follows: (1) With charges as a measure of expense under both payment schemes, all clinical departments had large groups of unprofitable patients: Medicare, $12,895,038; all-payor system, $15,553,893. (2) When costs were computed as the expense measure (using our hospital's cost-to-charge ratio), Medicare patients produced a deficit ($2,363,163); however, under an all-payor system there was a small net profit ($4,267,859). (3) The implementation of federalized DRG reimbursement rates increased our losses for this population from 1983 to 1984. (4) Reductions in outlier reimbursement (10%) and teaching costs (25%) caused our revenues to drop substantially, potentiating our losses. These findings suggest that hospitals with large emergency department admission populations, particularly Medicare patients, may be at a significant financial disadvantage under prospective payment systems.

Costs and Cost Analysis↗
PubMedDate not supplied

Financing health care in the Sudan: some recent experiments in the central region.

The macroeconomic difficulties facing the developing countries are having a direct impact on these countries' public health programs. Reduced budgets and rising demands for health care are forcing health ministries to either cut back on already inadequate health care services or identify alternative sources of revenue. This article describes and analyzes a set of experiments designed and implemented by the Sudan's Central Province that have effectively raised the operating budget of the regional health ministry. The seven experiments encompass imposition of fees, cost containment efforts, and local taxes earmarked for health. Together, the revenue generating efforts have improved the efficiency of service delivery, ensured more efficient resource allocation, raised much needed revenue for the health system, and honored the government's commitment to make free health care available to the Sudanese population.

Costs and Cost Analysis↗
PubMedDate not supplied

Reimbursement policy of hospitals in the Federal Republic of Germany.

The factors that have contributed to an overhaul of German hospital policy in the last 12 months are both numerous and highly interrelated. Rising health expenditures and inflexible mechanisms for implementing hospital policy are major culprits, as are the considerably changed political and economic circumstances over the last 15 years. Although this overhaul does embody some changes in the direction of German health care policy, they can best be understood as a further manifestation of the continuity that has characterized policy in this area for the past 100 years; a continuity rooted in the widely shared belief that disease, whatever its nature, is beyond the control of individuals. The key to cost containment is considered to lie in the reduction of the average length of stay and in the better utilization of hospital facilities. Payment remains directly related neither to specific diagnoses of individual patients nor to occupancy rates in individual departments, which vary greatly across disciplines and specialities. In the era that is unfolding, one political phenomenon requires close watching in the future: policy coalitions at the Land-level will become even more important as prime movers than they have been in the past. Demands for Strukturreform are a regular feature of many governmental systems. Yet the capacity of political bodies--whether ministries or parliaments--is severely limited by the distribution of power and control over resources and by the political dynamics which they generate. In the FRG, major reforms will not take place until after the 1987 federal elections, and it is essential to remember that the realms of campaign rhetoric and of policy choice and implementation are governed by entirely different sets of rules and constraints.

Financial Management↗
PubMedDate not supplied

The effect of centralized hospital administration on financial control and hospital service delivery: the case of Hong Kong.

Administration, financial control and service delivery are three mutually influential dimensions of a hospital system. The centralized hospital system of Hong Kong is a case-in-point that illustrates such influence. By spending only a small fraction of the Gross Domestic Product each year, the government has been able to provide limited modern health care services at nominal financial cost to the public. At the same time, hospitals are subject to a strict system of administrative and financial controls. Consequently, Hong Kong hospitals must utilize their limited facilities effectively to provide modern health services to the public. However, the trade-off between low-cost health services and limited facilities is the incurrence, by the public, of non-monetary costs in obtaining hospital admission.

Financial Management↗
PubMed1986

Evaluating the contribution to a hospital of specific physicians through the use of a financial and social weighting criterion developed on a microcomputer.

This paper will address how a hospital was able to utilize a microcomputer to determine weighting criteria to allocate Medicaid patient days to certain physicians when the State reduced the allowable days by 59 percent. The allocation basis had to address the following: the hospital's mission, financial viability, the impact on its teaching programs and university affiliations and antitrust and anticompetition laws and regulations.

Chicago↗
PubMed1982

Budgeting and controllable cost variances. The case of multiple diagnoses, multiple services, and multiple resources.

This paper examines an unfavorable cost variance in an institution which employs multiple resources to provide stay specific and ancillary services to patients presenting multiple diagnoses. It partitions the difference between actual and expected costs into components that are the responsibility of an identifiable individual or group of individuals. The analysis demonstrates that the components comprising an unfavorable cost variance are attributable to factor prices, the use of real resources, the mix of patients, and the composition of care provided by the institution. In addition, the interactive effects of these factors are also identified.

Budgets↗
PubMed1987

Net returns, fiscal risks, and the optimal patient mix for a profit-maximizing hospital.

As is well recognized, the provisions of PL98-21 not only transfer financial risks from the Medicare program to the hospital but also induce institutions to adjust the diagnostic mix of Medicare beneficiaries so as to maximize net income or minimize the net loss. This paper employs variation in the set of net returns as the sole measure of financial risk and develops a model that identifies the mix of beneficiaries that maximizes net income, subject to a given level of risk. The results indicate that the provisions of PL98-21 induce the institution to deny admission to elderly patients presenting conditions for which the net return is relatively low and the variance in the cost per case is large. Further, the paper suggests that the treatment of beneficiaries at a level commensurate with previous periods or the preferences of physicians may jeopardize the viability and solvency of Medicare-dependent hospitals.

Cost Allocation↗
PubMed1985

The debate over diagnosis related groups.

With the advent of the Prospective Payment System (PPS) using Diagnosis Related Groups (DRGs) as a classification method, the pros and cons of that mechanism have been sharply debated. Grouping the comments into categories related to administration/management, DRG system and quality of care, a review of relevant literature highlights the pertinent attitudes and views of professionals and organizations. Points constantly argued include data utilization, meaningful medical classifications, resource use, gaming, profit centers, patient homogeneity, severity of illness, length of stay, technology limitations and the erosion of standards.

Attitude of Health Personnel↗
PubMed1989

[Hospital financing and information on hospital clients].

The health care system can be characterized, among other facts, by the multiplicity of involved actors (institutions and individuals) acting for final goals in competition, or even in opposition. The principal goal of the economic organization of the health care system consists in applying a regulation to grant the coordination of the great number of decisions taken by decentralized actors in order to introduce them in economic way into a common final goal. The market forces appear unable to realize the necessary regulation in the health care system and centralized planning can lead to lack of effectiveness. For this reason, it's necessary to make use of a decentralized economic regulation; in this view health care financing systems are essential and could positively influence the behaviour of the actors as well as the costs. Information on hospital Casemix represents an important contribution to better transparency of the working of the health care system and to facilitate competition.

Delivery of Health Care↗
PubMed1984

Long-range hospital capital requirements planning: the state of the art, a proposal for change.

A Hospital Capital Requirements Planning System is proposed to channel competition through the use of a regional planning model. This model would help to reduce the social deadweight loss arising from competition-induced uncertainty. The system would increase the internal long-range planning capacity of hospitals and improve the quality of the applications presented for Certificate of Need review. Both health systems planners and investment bankers should have better information with which to evaluate hospital capital investment proposals.

Capital Expenditures↗
PubMed1982

Hospital 'profits': the effects of reimbursement policies.

This paper provides a theoretical and empirical analysis of the effect of cost-based reimbursement (CBR) on hospital costs and charges. It takes issue with previous analyses which have treated CBR as paying economic costs plus a mark-up, and have concluded that the mark-up is too small to significantly distort hospital decision-making. The basic thesis here is that if reimbursement is based on costs, accounting costs become a price to cost-paying patients, and will be optimized to maximize revenue. A hospital serving both cost and charge-paying (private) patients can set two price schedules. Accounting profits (ratio of charges to costs) are not a measure of economic profit but of relative prices to these two groups of patients. In the absence of constraints from regulation or patient co-payment, the optimum level of accounting costs would be infinite. In practice, the Medicare reimbursement formula links allowable costs to charges received from charge-paying patients. This formula creates incentives for the hospital to raise charges above the single-price, profit-maximizing monopoly level. This inflationary effect of the Medicare formula does not presuppose that Medicare pays less than full cost. The empirical analysis of hospital laboratory costs and charges generally supports the predictions; for other departments, the conclusions are consistent but more tentative because of data limitations. Overall, evidence suggests minimal cross-subsidy between cost and charge-paying patients. Comparisons of cost and charge levels in for-profit, voluntary non-profit and government hospitals are presented, but it is emphasized that inferences about relative efficiency and profitability cannot be drawn from accounting data, given the incentives created by CBR.

Accounting↗
PubMed1982

Case mix adjustment in hospital cost analysis: information theory revisited.

Acute care hospitals have long been viewed as multi-product 'firms', a characteristic which has necessitated special adjustments for cost analyses of this sector. Output mix adjustment has generally had an ad hoc flavour, with service/facility proxies and patient mix variables often being used interchangeably. Where specific patient mix adjustment has been applied, methodologies have varied widely. In this paper a framework for viewing output standardization in cost analyses is offered. It is suggested that adjustment is necessary in two dimensions--activity mix and, within patient care activities, patient mix. Patient mix standardization may be accomplished through left-side (dependent variable) or right-side (independent variables) adjustment, and right-side efforts may, in turn, be classified according to diagnostic grouping/weighing combinations. A number of right-side patient mix standardization methods are reviewed briefly and one--using information theory to compute diagnostic complexities--is tested in a time series/cross section analysis of 87 British Columbia acute care hospitals over an eight-year period. Case mix complexity is found to vary within individual hospitals over time, and is confirmed as an important determinant of unit cost variation. The information theory approach is shown to generate intertemporally stable case complexity measures. Teaching activities are found to exert a strong indirect influence on inpatient unit costs.

British Columbia↗
PubMed1984

Hospital rate review. A theory and an empirical review.

This paper presents a theory of the effects of rate review on hospital operations and organization. Its purpose is to explain the way in which hospitals have responded to regulation. In the development of this theory, the hospital product was viewed as a bundle of services, rate review was looked upon as a ceiling on the value of the bundle. The ceiling creates an incentive to remove elements from the bundle, i.e., to reduce 'quality'. When quality is variable, the effect on utilization becomes indeterminate. The model argues, among other things, that the hospital will change its service complement and its contractural arrangements with physicians and other hospitals. An extension of the organizational theory literature leads to implications concerning the ordering of hospital responses to regulation. The growing body of empirical literature on the effects of hospital rate review is used as an initial test of the major thrusts of the theory. A suggested agenda for further empirical work also is presented.

Cost Control↗
PubMed1985

Cost-shifting under cost reimbursement and prospective payment.

Cost-shifting is seen as a three-way phenomenon involving hospital interests as well as those of government and private patients. Without economies of scale, private patients are indifferent to government policies unless underpayment leads to hospital bankruptcy. In the presence of economies of scale, private patients benefit from reductions in government payment under either cost reimbursement or prospective payment. Their interest in a shift to prospective payment depends upon the hospital's location on its cost curve. Hospitals benefit from increases in payment rates in all cases, but benefit from a shift to prospective payment only if operating in a region of declining average costs. The conventional view of cost-shifting is inconsistent with profit maximization and may be inappropriate for many voluntary hospitals as well.

Cost Allocation↗
PubMed1984

Diagnosis related group prospective payment: implications for health care and medical technology.

This paper reviews the major features of the new DRG prospective payment system which was introduced for the payment of hospitals under the Medicare program October 1, 1983 in the United States. It explores its general implications for the health sector, and then examines its specific implications for the development, diffusion, and utilization of medical technology. It concludes with some of the research questions that require investigation to provide an informed basis for modification to the payment system that will ensure that quality health care will be provided at an affordable cost.

Costs and Cost Analysis↗