Study Identifies Characteristics of Profitable Hospitals

(HealthDay News) – The characteristics of profitable hospitals include for-profit status, higher mark-up, system affiliation, and regional power, according to research published in Health Affairs.

Ge Bai, PhD, from the Washington and Lee University in Lexington, Virginia, and Gerard F. Anderson, PhD, from the Johns Hopkins Bloomberg School of Public Health in Baltimore, examined the profitability of acute care hospitals in fiscal year 2013. They measured the net income from patient care services per adjusted discharge, based on Medicare Cost Reports and Final Rule Data.

The researchers found that the median hospital lost $82 per adjusted discharge. Overall, 45% of hospitals were profitable, 2.5% of which earned >$2,475 per adjusted discharge. Seven of the 10 most profitable hospitals were nonprofit; each earned over $163 million in total profits from patient care services. Hospitals that tended to be more profitable were those with for-profit status, higher mark-ups, system affiliation, or regional power, and those located in states with price regulation. Lower profitability was seen for hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization penetration.

“These findings can inform policy reforms, while providing a baseline against which to measure the impact of any subsequent reforms,” the authors write.

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  1. Bai G, Anderson GF. A more detailed understanding of factors associated with hospital profitability. Health Affairs. 2016;35(5):889-897. doi:10.1377/hlthaff.2015.1193.