Comparing high- and low-performing hospitals using risk-adjusted excess mortality and cost inefficiency

This study examines characteristics associated with high- and low-performing hospitals, where performance is defined in terms of both mortality outcomes and efficiency. In particular, we use data for Florida hospitals in 1999-2001 to classify hospitals into performance groups based on both risk-adjusted excess mortality and cost efficiency. The results indicate that hospitals in the high-performing group were more likely to be for-profit, had higher occupancy rates, had proportionately more Medicare and proportionately fewer Medicaid and self-pay patients, used fewer patient-care personnel per admission, and had higher operating margins than all other hospitals. Hospitals in the low-performing group, on the other hand, were less likely to be for-profit, had more beds, used more patient-care personnel per admission, had lower pay per patient-care personnel, had higher average costs, and had lower operating margins than all other hospitals. Interestingly, managed care presence, measured by proportion of HMO-PPO admissions, was not a significant factor in differentiating hospital performance groups.     

How Context Influences Hospital Readmissions from Skilled Nursing Facilities: A Rapid Ethnographic Study

IntroductionImproving hospital discharge processes and reducing adverse outcomes after hospital discharge to skilled nursing facilities (SNFs) are gaining national recognition. However, little is known about how the social-contextual factors of hospitals and their affiliated SNFs may influence the discharge process and drive variations in patient outcomes. We sought to categorize contextual drivers that vary between high- and low-performing hospitals in older adult transition from hospitals to SNFs.DesignTo identify contextual drivers, we used a rapid ethnographic approach with interviews and direct observations of hospital and SNF clinicians involved in discharging patients. We conducted thematic analysis to categorize contextual factors and compare differences in high- and low-performing sites.Setting and ParticipantsWe stratified hospitals on 30-day hospital readmission rates from SNFs and used convenience sampling to identify high- and low-performing sites and associated SNFs. The final sample included 4 hospitals (n = 2 high performing, n = 2 low performing) and affiliated SNFs (n = 5) with 148 hours of observations.MeasuresCentral themes related to how contextual factors influence variations in high- and low-performing hospitals.ResultsWe identified 3 main contextual factors that differed across high- and low-performing hospitals and SNFs: team dynamics, patient characteristics, and organizational context. First, we observed high-quality communication, situational awareness, and shared mental models among team members in high-performing sites. Second, the types of patients cared for at high-performing hospitals had better insurance coverage that made it feasible for clinicians to place patients based on their needs instead of financial abilities. Third, at high-performing hospitals a more engaged staff in the transition process and building rapport with SNFs characterized smooth transitions from hospitals to SNFs.Conclusions and ImplicationsContextual factors distinguish high- and low-performing hospitals in transitions to SNF and can be used to develop interventions to reduce adverse outcomes in transitions.     

Linking quality and performance. Quality orientation can be a competitive strategy for health care providers

Many organizations are not convinced a quality orientation pays off and are looking for ways to link quality with performance. The authors' exploratory study found that a quality orientation is a differentiating factor between low-performing and high-performing general service hospitals. They also developed a quality scale to assess the performance implications of quality-based strategies in the health care industry. Successful health care organizations (1) develop a strategic quality orientation at the management level, (2) support the pursuit of quality at the contact level, and (3) monitor external customers' perceptions of quality.     

Capital structure strategy in health care systems

The capital structures (the relative use of debt and equity to support assets) of leading health care systems are viewed as a strategic component of their financial plans. While not-for-profit hospitals as a group have maintained nearly constant levels of debt over the past decade, investor-owned hospitals and a group of leading health care systems have reduced their relative use of debt. Chief financial officers indicated that in addition to reducing debt because of less favorable reimbursement incentives, there was a focus on maintaining high bond ratings. Debt levels have not been reduced as sharply in these health care systems as they have in investor-owned hospitals, in part due to the use of debt to support investments in financial markets. Because these health care systems do not have easy access to equity, high bond ratings and solid investment earnings are central to their capital structure policies of preserving access to debt markets.     

Debt,investment and endowment accumulation: the case of not-for-profit hospitals

Not-for-profit hospitals benefit from special tax rules that allow state authorities to issue tax-exempt bonds on their behalf, which may affect their investment and financing choices. Hospitals may respond by increasing their investment in physical assets; however, they may also engage in tax arbitrage by using the tax-exempt debt while maintaining endowment assets. The paper combines data from tax (information) returns and the annual survey of hospitals by the American Hospital Association for 1993-1996. Overall, the results are consistent with substantial tax planning by not-for-profit hospitals. Of the US$ 55.9 billion in tax-exempt liabilities of hospitals in 1996, as much as US$ 32.6 billion could have been eliminated if hospitals spent their endowments instead of borrowing. Furthermore, controlling for hospital size (in terms of revenues and operating assets), endowment assets are associated with a higher ratio of tax-exempt (or total) debt to operating assets. In contrast, endowment assets are not related to taxable debt suggesting that the effects of the endowment on borrowing are motivated by tax incentives. Investment and endowment accumulation regressions suggest that increases in debt increase both physical investment and endowment accumulation but these effects are concentrated among cash-rich hospitals for which the effects on endowment accumulation effects are larger than the effects on physical investment.     

Evaluating the underlying factors behind variable rate debt

BACKGROUND: Recent trends show a greater usage of variable rate debt among health care bond issues. In 2004, 63.4% of the total health care bonds issued were variable rate compared with 30.6% in 1995 (Fitch Ratings, 2005). PURPOSE: The purpose of this study is to gain a better understanding of the underlying factors, credit spread, issue characteristics, and issuer factors behind why hospitals and health system borrowers select variable rate debt compared with fixed rate debt. METHODOLOGY: From 2000 to 2004, this study sampled 230 newly issued tax-exempt bonds issued by acute care hospitals and health care systems that included both variable and fixed rate debt issues. Using a logistic regression model, hospitals with variable rate debt issues were assigned a value of 1, whereas hospitals with fixed rate debt issues were assigned a value of 0. FINDINGS: This study found a positive association between bond insurance and variable rate debt and a negative association between callable feature and variable rate debt. Facilities located in certificate-of-need states that possessed higher case mix acuity, earned higher profit margins, generated higher debt service coverage, and held less debt were more likely to issue variable rate debt. PRACTICE IMPLICATIONS: Overall, hospital managers and board members of hospitals possessing a strong financial performance have an interest in utilizing variable rate debt to lower their cost of capital. In addition, this outcome may also reflect that investment bankers are doing a better job in educating senior hospital management about the interest rate savings benefit of variable rate compared with fixed rate debt.     

The effects of for-profit multihospital system ownership on hospital financial and operating performance.

The financial and operating performance of independent not-for-profit hospitals acquired by US for-profit multi-hospital systems in 10 Southern states between the years 1978 and 1982 was explored. The impact of system ownership on acquired hospitals was investigated by comparing the average financial performance of hospitals in the two years immediately prior to acquisition to the average for 1984 and 1985 and by comparing changes in the performance of acquired hospitals with changes in matched independent facilities. Findings suggest that for-profit multi-hospital systems were able to improve many of the financial and operating problems of acquired facilities. In comparison to independent not-for-profit hospitals, acquired hospitals were found to increase access to long-term debt, make improvements to plant and equipment, improve profitability, and increase efficiency to a greater extent. Prices in acquired hospitals rose more than those in independents and liquidity decreased to a greater extent.     

公立医院债务风险成因及化解策略探讨

在财政投入有限的情况下,医院为扩大规模,改善就医条件,提高综合实力,对外举债无疑是一条重要的筹资渠道,但是公立医院长期背负债务负重前行,在目前结余率极低的状况下,总体资产良好的局面会很快消失,取而代之的是沉重的债务负担,这既不利于维护公立医院的公益性质,也给医院的可持续发展带来了风险。文章通过对某地区18家公立医院的债务融资的现状进行分析,探讨其产生的根本原因,提出债务化解的方法和建议。     

Hospitals and health systems: the best of times and the worst of times

Hospitals and health systems, whether general acute care hospitals or specialty-driven hospitals, are attempting to prosper in a unique time. This year, hospitals throughout the country will see increased reimbursement for hospital inpatient services, rather than decreased reimbursement. Many hospitals are examining a multitude of options for debt financing and a number of the nation's hospitals are in the process of renovating, expanding, or replacing their current hospitals. Further, more private equity and venture capital funds are pursuing hospital investments than seen in several years. Despite the positive signals stemming from many of the country's hospitals, this remains a time of tremendous uncertainty and risk in the hospital industry. This article discusses five strategic and development issues facing many hospitals and addresses how hospitals can prepare for the future should the current climate, supportive of growth, development, investment, and debt financing, change.     

High-performing and low-performing nursing homes: a view from complexity science

BACKGROUND: There continues to be concern for the quality of care and quality of life for nursing home residents. Some scientists have turned their attention to viewing nursing homes as complex adaptive systems to inform our understanding of organizational performance. PURPOSE: The purpose of this study was to describe the working conditions in four nursing homes-two high performing and two low performing-through the lens of complexity science theory. METHODS: A qualitative case study approach was used to examine four nursing homes. Extreme case examples-high- and low-performing nursing homes-were purposefully selected. More than 100 hr of observation, 70 formal interviews, numerous informal interviews, and document review were the primary data collection methods. FINDINGS: Using select complexity science principles added richness to the analysis, highlighting the stark contrast between the high- and low-performing nursing homes. Leaders in the high-performing homes behaved congruently with the nursing home's stated and lived mission by fostering connectivity among staff, ample information flow, and the use of cognitive diversity. In contrast, leadership in low-performing homes behaved disharmoniously with the stated mission, which confused and eroded trust and relationships among staff members, contributed to poor communication, and fostered role isolation and discontinuity in resident care. PRACTICE IMPLICATIONS: The study offers insights into the importance of mission- and values-based leadership behaviors, suggesting that an overuse of mechanistic, linear command-and-control approaches to improving care, such as punitive measures to insist on regulatory compliance, will do little to ultimately improve care. Rather, relationship-centered leadership that embraces co-management and mutual shaping of resident care complements doing the right thing for residents from a values-based shared experience. Examples of practice implications include developing a strong, coherent organizational mission; having fewer, more flexible rules to foster creativity; and allowing lateral decision making.     

THE EFFECT OF HOSPITAL–PHYSICIAN INTEGRATION ON HEALTH INFORMATION TECHNOLOGY ADOPTION

The US federal government has recently made a substantial investment to enhance the US health information technology (IT) infrastructure. Previous literature on the impact of IT on firm performance across multiple industries has emphasized the importance of a process of co‐invention whereby organizations develop complementary practices to achieve greater benefit from their IT investments. In health care, employment of physicians by hospitals can confer greater administrative control to hospitals over physicians' actions and resources and thus enable the implementation of new technology and initiatives aimed at maximizing benefit from use of the technology. In this study, I tested for the relationship between hospital employment of physicians and hospitals' propensity to use health IT. I used state laws that prohibit hospital employment of physicians as an instrument to account for the endogenous relationship with hospital IT use. Hospital employment of physicians is associated with significant increases in the probability of hospital health IT use. Therefore, subsidization of health IT among hospitals not employing physicians may be less efficient. Furthermore, state laws prohibiting hospitals from employing physicians may inhibit adoption of health IT, thus working against policy initiatives aimed at promoting use of the technology. Copyright © 2012 John Wiley & Sons, Ltd.     

The role of financial market performance in hospital capital investment

Many not-for-profit hospitals hold large portfolios of financial investments, making them vulnerable to fluctuations in market performance. This article examines the association of bond and equity market performance with investment in property, plant, and equipment by 194 not-for-profit general hospitals in California over the period 1997 to 2006. The study combines retrospective panel data from the California Office of Statewide Health Planning and Development with year-end returns on the S&P 500 and ten-year US Treasury bonds. Using fixed-effects regression, we find a significant positive association between S&P 500 performance and hospitals' capital investment; investment is not correlated with ten-year Treasury bond performance.     

An examination of contemporary financing practices and the global financial crisis on nonprofit multi-hospital health systems

This study examines the impact of the 2008 global financial crisis on large US nonprofit health systems. We proceed from an analysis of the contemporary capital financing practices of 25 of the nation's largest nonprofit hospitals and health systems. We find that these institutions relied on operating cash flows, public issues of insured variable rate debt, and accumulated investment to meet their capital financing needs. The combined use of these three financial instruments provided these organizations with $22.4 billion of long-term capital at favorable terms and the lowest interest rates. Our analysis further indicates that the extensive utilization of bond insurance, auction rate debt, and interest rate derivatives created significant risk exposures for these health systems. These risks were realized by the broader global financial crisis of 2008. Findings indicate these health systems incurred large losses from the early retirement of their variable rate debt. In addition, many organizations were forced to post nearly $1 billion of liquid collateral due to the falling values of their interest rate derivatives. Finally, the investment portfolios of these large nonprofit health systems suffered millions of dollars of unrealized capital losses, which may minimize their ability to finance future capital investment requirements.     

湖北省县级公立医院改革试点医院经济运行状况分析

目的:了解湖北省县级公立医院改革试点医院2009—2011年经济运行状况及其中存在的问题。方法:通过定性与定量﹑描述分析与对比分析等方法,研究经济运行现状及其变化发展趋势。结果:湖北省县级公立医院改革试点医院总体经济运行基本平稳,创收能力增强,偿债能力﹑运营能力和经营效率较低。结论:湖北省县级公立医院存在债务负担较重﹑政府投入不足﹑经营效率低下等问题,提出了控制负债规模﹑限制县级医院规模﹑增加政府投入等政策建议。     

Hospital profitability and capital structure: a comparative analysis.

This article compares the financial performance of hospitals by ownership type and of five publicly traded hospital companies with other industries, using such indicators as profit margins, return on equity (ROE) and total capitalization, and debt-to-equity ratios. We also examine stock returns to investors for the five hospital companies versus other industries, as well as the relative roles of debt and equity in new financing. Investor-owned hospitals had substantially greater margins and ROE than did other hospital types. In 1982, investor-owned chain hospitals had a ROE of 26 percent, 18 points above the average for all hospitals. Stock returns on the five selected hospital companies were more than twice as large as returns on other industries between 1972 and 1983. However, after 1983, returns for these companies fell dramatically in absolute terms and relative to other industries. We also found investor-owned hospitals to be much more highly levered than their government and voluntary counterparts, and more highly levered than other industries as well.     

Determinants of hospital bad debt: multivariate statistical analysis.

Although the issue of uncompensated care (bad debt plus charity care) has been actively debated in the public arena, there has been little discussion of the bad debt issue alone. This issue is important since issues of bad debt, charity care and uncompensated care are significantly different from each other. Based on 1992 State of Missouri data, the results of our study indicate that more efficient hospitals (measured by occupancy rate), hospitals with more patients covered by prospective payment systems (measured by Medicare discharges), and for-profit hospitals incurred significantly less bad debt cost than other hospitals. However, the difference in bad debt between for-profit hospitals and not-for-profit hospitals is dissipated when using a multivariate statistical model. In addition, this study also reveals that hospitals which provide more charity care have the lowest bad debt costs. Policy implications are also discussed.     

The association of debt financing with not-for-profit hospitals' operational and capital-investment efficiency

Increased debt in companies can motivate both operational and capital-investment efficiency. This positive influence of debt is attributed to creditors' oversight of corporate behavior and the need to generate cash flows to service debt. Our study investigates whether debt has a similar relationship with efficiency in not-for-profit hospitals. Using statistical analysis of a database of audited financial statements of not-for-profit hospitals, we test whether debt is associated with six distinct measures of operational and capital-investment efficiency. We find that debt either has no association with efficiency or predicts decreased efficiency. Possible explanations are that creditors' oversight is less tight in the not-for-profit setting and that debt may at times motivate excessive capital investment because of a legal requirement to tie tax-exempt debt with a capital-investment project.     

Patterns of financing for the largest hospital systems in the United States

The ten large systems reviewed in this column have greater degrees of financial leverage than do most freestanding hospitals. Larger firms typically have both greater capital access and lower costs of financing. Both voluntary and IO systems make extensive use of variable rate financing, but the percentage of variable rate financing is slightly higher for voluntary systems. This difference may be attributable to larger yield curve spreads for tax-exempt versus taxable securities. Interest rate swaps were used by 70 percent of the systems, but the actual amount swapped was relatively minor. This may change in the future as financial officers become more comfortable and familiar with interest rate swap arrangements. When compared to IO systems, voluntary systems have extensive levels of cash relative to their debt positions. Cash balances are more critical in the bond-rating process for voluntary hospitals, and the ability to raise new equity is much more limited in the voluntary sector. Very little capital leasing was used in any of the systems.     

Strategies of High-Performing Teaching Hospitals

Teaching hospitals are large and complex, and under constant financial pressure. In this study, we examine the financial performance of 80 large teaching hospitals in the 20 largest cities in the U.S. over the last five years, to identify which strategic and operational management factors separate high-performing hospitals from lower-performing ones. Results suggest that growth strategies should continue to be sought for improving long-term financial condition. Operational efficiency was less important than market share, economic status of surrounding community, hospital size, and teaching intensity. This study's findings should help guide strategic planning for teaching hospitals.