A market, operation, and mission assessment of large rural for-profit hospitals with positive cash flow

J Rural Health. Winter 2007;23(1):10-6. doi: 10.1111/j.1748-0361.2006.00062.x.

Abstract

Context: National benchmark data for 2002 indicate that large rural for-profit hospitals have a median cash flow margin of 19.5% compared to 9.2% for their nonprofit counterparts.

Purpose: This study aims to gain insight regarding the driving factors behind the high cash flow performance of large rural for-profit hospitals.

Methods: Using 3 annual periods of Centers for Medicare and Medicaid cost report data with the last fiscal year ending between September 30, 2002, and August 30, 2003, the study found a cash flow margin of 21.5% for the large rural for-profit hospitals. All these facilities were owned by hospital management companies. To assess their underlying market, operational, and mission factors, these hospitals were compared to a similar comparison group of large rural nonprofit hospitals that are system owned and have positive cash flows.

Findings: Using logistic regression analysis, the study found lower operating expense per adjusted discharge and salary expense as a percentage of total operating expense among large rural for-profit, system-owned hospitals with positive cash flows relative to nonprofits with similar traits.

Conclusion: Overall, the findings of this study reflect how these for-profit hospitals, which are owned by hospital management companies, focus on controlling their labor costs as well as operating costs per discharge in order to achieve a greater positive cash flow position.

Publication types

  • Comparative Study

MeSH terms

  • Accounts Payable and Receivable*
  • Benchmarking / economics
  • Catchment Area, Health
  • Efficiency, Organizational
  • Financial Management, Hospital / statistics & numerical data*
  • Health Care Sector
  • Hospital Bed Capacity / statistics & numerical data
  • Hospital Costs / statistics & numerical data
  • Hospitals, Proprietary / economics*
  • Hospitals, Proprietary / organization & administration
  • Hospitals, Rural / economics*
  • Hospitals, Rural / organization & administration
  • Hospitals, Voluntary / economics
  • Hospitals, Voluntary / organization & administration
  • Humans
  • Income / statistics & numerical data
  • Logistic Models
  • Organizational Culture
  • Organizational Objectives
  • Ownership / economics
  • United States