Operating Profitability of For-Profit and Not-for-Profit Florida Community Hospitals During Medicare Policy Changes, 2000 to 2010

This study analyzed Florida community hospitals from 2000 through 2010, assessing changes in pre-tax operating margin (PTOM). Florida Agency for Health Care Administration data were analyzed for 104 community hospitals (62 FPs and 42 NFPs). Academic, public, and small hospitals were excluded. A mixed-effects model was used to assess the association of RAC implementation, organizational and payer type variables, and ownership interaction effects on PTOM. FP hospitals began the period with a higher average PTOM, but converged with NFPs during the study period. The average Medicare Advantage effect was not significant for either ownership type. The magnitude of the RAC variable was significantly negative for average PTOM at FPs (–4.68) and positive at NFPs (0.08), meaning RAC was associated with decreasing PTOM at FP hospitals only. RAC complements other Medicare surveillance systems that detect medically unnecessary admissions, coding errors, fraud, and abuse. Since its implementation in Florida, average FP and NFP operating margins have been similar, such that the higher margins reported for FP hospitals in the 1990s are no longer evident.

Source: Inquiry: The Journal of Health Care Organization, Provision, and Financing - August 19, 2015 Category: Health Management Authors: Langland-Orban, B., Large, J. T., Sear, A. M., Zhang, H., Zhang, N. Tags: Article Source Type: research