Going public: transforming non-profit hospitals into investor-owned corporations--advantages and disadvantages.

Going public is not a good strategy for every hospital. However, hospitals that could benefit should establish a strategic plan for going public. Investor demand indicates that equity financing is not only popular, but that it can be profitable for companies. In 1983 Russell (1985) noted that 889 companies raised $12.95 billion by going public. In 1984 equity raised dropped back to $3.5 billion. There are more challenges facing hospitals today than at any moment in history. Some hospitals need to make radical philosophical and financial changes if they are to survive. Going public, if done properly and conscientiously, can provide hospitals with interest-free dollars and future financing at reasonable costs.     

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

It is often assumed that investor-owned hospitals are more market driven than are not-for-profit hospitals, and that they will maximize output and minimize inputs, to the exclusion of other management strategies. To resolve the conflicting research evidence, this study analyzed efficiency and profitability measures for approximately 50 investor-owned and 60 not-for-profit hospitals in Florida for the period from 1982 through 1988. The results indicate that the investor-owned hospitals used significantly fewer FTE staff per bed, had significantly fewer manhours per adjusted patient day, and paid significantly less in wages and had significantly higher operating margins (profit) than did the not-for-profit institutions.     

Difference in composition of personnel among government, voluntary, and investor-owned U.S. community hospitals

The relationship between an organization's staff structure, particularly the relative proportions of its administrators and line staff, and the organization's size, ownership status, financial condition, and scope of services is a subject that has attracted a good deal of attention from organizational theorists. At the present time, the subject is especially important to the hospital industry because of widespread concern about hospital costs and interest in how personnel expenses contribute to these costs.     

Operating characteristics and comparative performance of investor-owned multihospital systems

Investor-owned multihospital systems (IOMS's) have grown in number and influence in the United States in recent years, but very little is known about their comparative characteristics and performance. Since 1982 all hospitals in Florida have been required to submit standardized financial and operating data to the Health Care Cost Containment Board. This study analyzes data for the three largest IOMS's in Florida (American Medical International, Hospital Corporation of America, and Humana) for the years 1982-1989. Efficiency ratios, operating characteristics, and operating margins were compared. A multiple regression analysis was performed to determine the amount of variance in operating margins, which was explained by the efficiency measures and operating characteristics.     

Materials management in investor-owned, nonprofit government, and other general hospitals

This article compares investor-owned, nonprofit government, and other general hospitals in Georgia in the areas of materials management practices, systems, and performance. Findings reveal investor-owned hospitals paid less for supplies but did not demonstrate performance in other areas that was superior to that of other types of hospitals.     

The financial performance of selected investor-owned and not-for-profit system hospitals before and after Medicare prospective payment.

This article analyzes determinants of cost and profitability, including the influence of Medicare prospective payment (PPS), between 1983 and 1985 for nearly 300 hospitals belonging to investor-owned (IO) and not-for-profit (NFP) systems. Using approaches that assure comparability of financial data, and including case mix, quality, competition, and regulation measures, the findings indicate that (1) in both years, competitive environment, case mix, age of facility, and scope of diversified services were important determinants of average cost, while a process measure of quality was insignificant and the independent effect of ownership type was insignificant for cost; (2) effects of HMO competition and hospital strategy were stronger in 1985 than in 1983; (3) operating margins for all types of hospitals showed increases, with a somewhat greater improvement for NFP system members; and (4) significantly greater declines in volume of care occurred for IO system members. Implications for future research are discussed.     

Haunted by Enron's ghost. National Century Financial Enterprises files for Chapter 11, leaving a string of broken healthcare chains and hospitals

Some are calling it the Enron of the healthcare industry. Ryder trucks hauled possible evidence from embattled financier National Century Financial Enterprises during an FBI raid. NCFE filed for Chapter 11 bankruptcy protection last week, sending ripples through the industry and contributing to the bankruptcies of a string of national healthcare chains and at least six hospitals.