Hospital Ownership and Financial
Performance: An Integrative Research
Review
Research Objective
• Does ownership affect hospital financial
performance (cost, revenue, profit,
efficiency)?
Academy Health Annual Research Meeting
Boston, June 28, 2005
•
•
Yu-Chu Shen
Naval Postgraduate School and NBER
Competing theories with contrasting
predictions
Hundreds of empirical studies to date with
conflicting findings
•
•
Karen Eggleston, Joseph Lau, Christopher Schmid
Tufts University
policymakers have little clear evidence
economics of ownership and behavior
imperfectly understood
Funded by grant #050953 under the Robert Wood Johnson Foundation’s
Changes in Health Care Financing and Organization (HCFO) Initiative
Scope of the Integrative Review
Scope of the Integrative Review
† Synthesize the main findings of the
empirical literature between January 1990
and July 2004 on hospital ownership and
performance (published or unpublished)
† Examine multivariate empirical studies of
US acute general short stay hospitals;
† Examine studies that compare differences
between for-profits and nonprofits,
between nonprofits and government, or
both.
† We start with 1434 potentially relevant
studies, and end up with 141 studies for
the integrative review.
† Focus on four broad categories of performance
measures:
Presentation Is Focused On Four
Financial Measures
Integrative Review Research
Questions
Number of
studies
analyzed the
outcome
„ financial performance (cost, revenue, profit, and
efficiency)
„ quality / patient outcomes
„ uncompensated care or community benefits
„ Staffing
Number of
articles with
usable
information
Outcomes Reviewed
Operating cost
Patient revenue and returns
on assets
22
19
14
11
Profit margin
17
14
Cost and technical efficiency
19
15
1. What is the magnitude of the
difference between NFP and FP—
what is the effect size?
2. How precise or reliable is this
estimated effect size?
3. How do differences in analytic
methods and other study features
affect the estimates of effect size?
1
Cost: Summary of N-F Effect Size By Method
Types
Categorizing Analytical Methods
† Three types of methodology rigor
† Type 3: if a study meets both of the
following conditions:
(a) uses panel estimation or explicitly
accounts for potential selection problem
(b) includes two of the following three
sets of controls: patient level, hospital
level, market level
† Type 2: if meets EITHER (a) or (b)
† Type 1: if meets NEITHER (a) nor (b)
Effect size
(95% CI)
Study
method_level==0
gautam1996
wang2001
shukla1997
Method Type 1
% Weight
0.11 ( 0.04, 0.18)
0.23 ( 0.01, 0.45)
0.27 ( 0.05, 0.49)
Subtotal
5.3
1.6
1.6
0.16 ( 0.06, 0.25)
8.5
-0.23 (-0.38,-0.08)
-0.08 (-0.12,-0.04)
-0.03 (-0.08, 0.02)
-0.01 (-0.03, 0.02)
2.7
6.3
6.0
6.8
method_level==1
campbell 1990
goes1995
fournier1997
connor1998
Method Type 2
becker2002
clement1997
lawrence1990
Subtotal
method_level==2
shen2003b
wilcox-gok2002
carey2000
carey1997
Method Type 3
mark1999
zeckhauser1995
bazzoli2000
potter2001
Subtotal
Overall
FP is less costly
-.48845
0
0.04 ( 0.01, 0.06)
0.04 ( 0.00, 0.08)
0.12 ( 0.03, 0.20)
6.7
6.3
4.6
-0.01 (-0.05, 0.04)
39.4
-0.06 (-0.08,-0.04)
6.8
-0.05 (-0.10, 0.00)
-0.04 (-0.05,-0.02)
0.00 (-0.02, 0.03)
6.1
6.9
6.8
0.02 ( 0.01, 0.03)
0.05 (-0.00, 0.11)
0.08 ( 0.02, 0.14)
0.11 ( 0.10, 0.13)
7.0
5.8
5.7
6.9
0.01 (-0.03, 0.06)
52.0
0.02 (-0.01, 0.05)
100.0
FP is more costly
.488456
Effect size
Cost: Summary of N-F Effect Size By
Covered Region
Study
Effec t size
(95% CI)
national==0
campbell1990
goes1995
wilc ox-gok2002
fournier1997
zeckhauser1995
wang2001
shukla1997
Subtotal
-0.23 (-0.38,-0.08)
-0.08 (-0.12,-0.04)
-0.05 (-0.10, 0.00)
-0.03 (-0.08, 0.02)
0.05 ( -0.00, 0.11)
0.23 ( 0.01, 0.45)
0.27 ( 0.05, 0.49)
-0.01 (-0.08, 0.05)
2.7
6.3
6.1
6.0
5.8
1.6
1.6
30.2
-0.06 (-0.08,-0.04)
-0.04 (-0.05,-0.02)
-0.01 (-0.03, 0.02)
0.00 ( -0.02, 0.03)
0.02 ( 0.01, 0.03)
0.04 ( 0.01, 0.06)
0.04 ( 0.00, 0.08)
0.08 ( 0.02, 0.14)
0.11 ( 0.10, 0.13)
0.11 ( 0.04, 0.18)
0.12 ( 0.03, 0.20)
0.03 ( -0.00, 0.07)
6.8
6.9
6.8
6.8
7.0
6.7
6.3
5.7
6.9
5.3
4.6
69.8
0.02 ( -0.01, 0.05)
100.0
national==1
shen2003b
carey2000
connor1998
carey1997
mark1999
becker 2002
clement1997
bazzoli2000
potter2001
gautam1996
lawrence1990
Subtotal
Single state
sample
National
sample
O verall
FP is less costly
- .48845
0
Effect size
% Weight
0. 04 ( 0. 02, 0.06)
13.1
0. 07 ( 0. 04, 0.11)
0. 08 (-0.07, 0.23)
12.0
4.2
younis 2001
S ubtotal
0. 12 ( 0. 10, 0.14)
0. 08 ( 0. 03, 0.13)
13.1
42.4
met hod_level==2
shen2003b
bazzoli2000
-0.02 (-0.04, 0.00)
0. 00 (-0.06, 0.06)
13.2
10.3
mark1999
wilcox-gok2002
S ubtotal
0. 02 ( 0. 01, 0.03)
0. 04 (-0.01, 0.09)
0. 01 (-0.02, 0.03)
13.6
11.2
48.3
0. 06 ( 0. 03, 0.10)
100.0
Method Type 2
Method Type 3
FP-. generates
less
57406
revenue
(-0.01, 0.09)
(-0.07, 0.23)
( 0.06, 0.36)
( 0.06, 0.50)
( 0.14, 0.57)
( 0.05, 0.29)
11.2
4.2
4.5
2.4
2.4
24.8
natio nal==1
shen 2003b
bazzoli2000
mark1999
conn or1998
clement1997
-0.0 2 (-0.04, 0.00)
0.00 (-0.06, 0.06)
0.02 ( 0.01, 0.03)
0.04 ( 0.02, 0.06)
0.07 ( 0.04, 0.11)
13.2
10.3
13.6
13.1
12.0
0.12 ( 0.10, 0.14)
0.04 (-0.00, 0.08)
13.1
75.2
0.06 ( 0.03, 0.10)
100.0
FP generates
more
.574 063
revenue
0
Eff ect size
% Weight
FP generates
more
.574063
revenue
Profit Margin: Summary of N-F Effect
Size By Method Type
Effect size
(95% CI)
Study
0.04
0.08
0.21
0.28
0.35
0.17
0
Effect size
4.5
2.4
2.4
9.3
Method Type 1
(
(
(
(
% Weight
0. 06, 0.36)
0. 06, 0.50)
0. 14, 0.57)
0. 16, 0.37)
Ov erall
Effect size
(95% CI)
FP-.57406
generates less
revenue
0. 21
0. 28
0. 35
0. 26
FP is more costly
.488456
natio nal==0
wilcox-g ok2002
gapenski199 3 Single state
molin ari1993 sample
shukla1997
wang20 01
Subtotal
Overa ll
Effect s ize
(95% CI)
met hod_level==0
molinari1993
shukla1997
wang2001
S ubtotal
clement 1997
gapenski1993
Stud y
younis2001
Subtotal
S tudy
met hod_level==1
connor1998
Revenue: Summary of N-F Effect Size
By Covered Region
National
sample
Revenue: Summary of N-F Effect Size
By Method Type
method_level= =0
molinari1993
shukla1997
wang2001
Subtotal
0.20
0.22
0.28
0.23
Method Type 1
method_level= =1
gapenski1993
goes1995
picone2002
clement1997
connor1998
thor pe2001
Subtotal
method_level= =2
bazzoli2000
mar k1999
wilcox-gok2002
shen2003b
zeckhauser 1995
Subtotal
Method Type 2
Method Type 3
Overall
FP earns
lower profit
- .49741
0
Effect size
% Weight
( 0.06, 0.35)
( 0.00, 0.44)
( 0.06, 0.50)
( 0.12, 0.33)
3.5
1.9
1.9
7.4
-0.09 ( -0.24, 0.06)
3.3
-0.03
0.02
0.04
0.06
0.28
0.06
( -0.07, 0.00)
( 0.02, 0.03)
( 0.00, 0.08)
( 0.03, 0.08)
( 0.25, 0.32)
(-0.02, 0.13)
8.8
9.9
8.8
9.5
9.0
49.2
0.01
0.02
0.02
0.02
0.05
0.02
(-0.05, 0.07)
( 0.00, 0.03)
(-0.02, 0.07)
( 0.00, 0.04)
(-0.01, 0.10)
( 0.01, 0.03)
7.7
9.9
8.3
9.6
8.0
43.4
0.06 ( 0.02, 0.09)
100.0
FP earns higher
profit
.497418
2
Profit Margin: Summary of N-F Effect
Size By Covered Region
Efficiency: Summary of N-F Effect
Size By Covered Region
Study
Effect s ize
(95% CI)
Study
Effect s ize
(95% CI)
national==0
gapenski1993
-0.09 (-0.24, 0.06)
3.3
national==0
li2001
0. 09 (-0.00, 0.18)
-0.03 (-0.07, 0.00)
0. 02 (-0.02, 0.07)
0. 05 (-0.01, 0.10)
0. 20 ( 0.06, 0.35)
0. 22 ( 0.00, 0.44)
0. 28 ( 0.06, 0.50)
8.8
8.3
8.0
3.5
1.9
1.9
chirikos2000
chirikos1994
ferrier1996
sari2003
Subtotal
Subtotal
0. 05 (-0.01, 0.12)
35.7
national==1
bazzoli2000
mark1999
shen2003b
picone2002
clement 1997
0. 01
0. 02
0. 02
0. 02
0. 04
goes1995
wilcox-gok2002
zeckhauser1995
molinari1993
Single state
shukla1997
wang2001
sample
connor1998
thorpe2001
Subtotal
National
sample
Ov erall
FP earns
-.49741lower profit
0
Eff ect size
% Weight
(-0.05, 0.07)
( 0.00, 0.03)
( 0.00, 0.04)
( 0.02, 0.03)
( 0.00, 0.08)
7.7
9.9
9.6
9.9
8.8
0. 06 ( 0.03, 0.08)
0. 28 ( 0.25, 0.32)
0. 06 ( 0.02, 0.11)
9.5
9.0
64.3
0. 06 ( 0.02, 0.09)
100.0
FP earns higher
.497418 profit
0. 11
0. 12
0. 19
0. 30
0. 16
Single state
sample
national==1
rosk o1999
brown2003
rosk o2001b
folland2001
National
sample
koop1997
ozcan1992
zuckerman1994
burgess1996
rosk o2001a
Subtotal
Ov erall
FP is less
efficient
-.37047
0
Eff ect size
7.4
5.4
6.9
7.0
33.3
-0.17 (-0.20,-0.14)
7.5
-0.12 (-0.16,-0.07)
-0.11 (-0.13,-0.09)
-0.07 (-0.10,-0.04)
7.3
7.6
7.5
-0.06 (-0.11,-0.02)
-0.06 (-0.10,-0.02)
-0.06 (-0.11,-0.01)
7.3
7.4
7.3
0. 08 ( 0.05, 0.11)
0. 12 ( 0.08, 0.17)
-0.05 (-0.11, 0.01)
7.5
7.3
66.7
0. 02 (-0.04, 0.08)
100.0
FP is more efficient
.370474
What Do We Learn? (2)
† Evidence is pretty conclusive regarding
revenue and profit margins
† Functional forms and analytical
methods matter
† There is little evidence of any difference
in cost between FP and NFP hospitals
† Evidence is mixed regarding efficiency.
„ Single state (Florida) analyses find FP
more efficient, national analyses tend to
find FP less efficient.
6.5
( 0.07, 0.15)
(-0.03, 0.26)
( 0.11, 0.26)
( 0.24, 0.37)
( 0.08, 0.25)
What Do We Learn? (1)
„ Most studies find for-Profits earn more
revenue (per admission) and have higher
profit margins
% Weight
„ Weaker methods and functional forms
tend to predict larger differences
between not-for-profits and for-profits
† National samples tend to produce
more conservative estimates of effect
size than single state analyses
3