Differences in characteristics of hospitals with sustained high and sustained low profitability.

The organizational and operational characteristics of 140 private Florida hospitals with sustained high profitability and sustained low profitability were compared using pretax operating margin (PTOM) and pretax return on assets (PROA) measures. Approximately 15 to 20 percent of hospitals were defined as PTOM or PROA high-profit or low-profit for the years 1990, 1991, and 1992. The PTOM or PROA high-profit groups had a lower adjusted average length of stay and debt utilization, and a higher labor yield, occupancy rate, and percent with high hospital accreditation ratings (p < .05). In addition, the PROA high-profit group had a higher case-mix index and Medicare mix (p < .05). Characteristics that were different for high-profit and low-profit groups were within the scope of management.

Predicting financial risk under capitation.

As managed care proliferates, providers must understand the types of financial risks they face when providing care under capitation. There are two basic types of financial risk (which arises from uncertainties about revenues and costs): objective risk and subjective risk. Objective risk exists when financial managers can anticipate, with reasonable confidence, the expected range of revenue and cost variation. Subjective risk exists when financial managers cannot accurately predict the range of revenue and cost variation. Providers moving from a prospective payment system to a capitated system will find that objective financial risk potentially is reduced. However, subjective financial risk under capitation can be significant. To minimize subjective risk, healthcare executives must have access to data about the population covered by the capitation contract, must have sufficient numbers of covered lives, must reduce costs involved with providing healthcare services, and must reduce the volume of patients treated--for example, by implementing disease and injury prevention programs.

Graduate education in health services administration. Integrating business with clinical perspectives.

Health services administration continues to evolve in response to environmental changes in reimbursement, technology, demographics, and health care reform. These changes encourage further integration of business skills in health services, an emphasis which often conflicts with the perspectives of clinicians. The balance between business and clinical perspectives must be developed such that administrators and clinicians foster the survival and growth of their organizations while assuring comprehensive and quality health services to patients and the community. This paper describes education in health services administration, and uses a survey of one program's graduates to assess the usefulness of the current educational model in balancing business and clinical perspectives.

The choice of thrombolytic agents in the emergency department.

STUDY OBJECTIVE: To assess the choice of thrombolytic agents in emergency departments and whether administrators and third-party payers are influencing choices because of cost differences. DESIGN: A telephone survey. TYPE OF PARTICIPANTS: ED medical directors, stratifying for hospital ownership, size, and regions of the United States. MEASUREMENTS AND MAIN RESULTS: One hundred twenty-three ED medical directors completed the interview. Findings indicate that formularies include recombinant tissue-type plasminogen activator (rt-PA) in 94.3% of surveyed hospitals and streptokinase in 63.4%. Public hospitals were significantly less likely to have rt-PA on the formulary (P = .0001). Based on payer type, 68.9% to 77.5% of patients requiring thrombolysis receive rt-PA, with approximately 15% of EDs using it for 1% to 25% of patients and an additional 15% using it for 26% to 50% of patients. Fourteen medical directors (11%) reported that they delay treatment with rt-PA until authorization is provided by the health maintenance organization, and 40% indicated they would change their choice of agents if rt-PA was denied. Cardiologists were the primary decision makers regarding thrombolytic agents in all types of hospitals. CONCLUSION: Although rt-PA is the most frequently selected thrombolytic agent, significant practice variations exist among hospitals. To avoid interference from third-party payers and administrators, physicians may need to make decisions regarding such expensive agents in more objective forums (eg, pharmacy and therapeutics committees) and be better prepared to defend the resulting practice guidelines.

The determinants of hospital profitability.

Although numerous studies related to hospital costs and financial condition have been conducted, no studies have specifically attempted to identify the underlying determinants of hospital profitability. If these factors are identified, hospital executives can focus their efforts on those aspects of operations that most affect profitability, and public policymakers can gain insights into the potential effects of alternative policy decisions on hospital financial viability. Our study uses multiple regression analysis with 22 hypothesized profitability determinants as independent variables and five profitability measures as dependent variables. The data set consists of 1989 data from 169 investor-owned and private not-for-profit general acute care hospitals in the state of Florida. The results provide evidence that selected managerial and patient-mix variables are predictors of profitability. Structural factors that are beyond the control of managers (organizational and community characteristics) appear to be less important in influencing profitability. These findings may be viewed positively by hospital executives since it appears profitability is not dictated by organizational or market factors but more strongly influenced by factors that, to some extent, can be influenced by hospital policies and practices.

Factors influencing high and low profitability among hospitals.

This article examines the determinants of exceptionally high and exceptionally low profitability among hospitals. Using 1989 data from a sample of 169 acute care hospitals in Florida, it reveals that debt load, labor intensity, and Medicare mix play important roles in exceptional profitability. Administrators can therefore take selected actions over the long run to alter their hospital's chance of exhibiting exceptionally high or exceptionally low profitability.

Successful business planning for new programs in health care organizations.

Health care organizations implement business strategies through programs and services, and success depends on careful program design and execution. A conscientious design requires thorough efforts in organizing the planning process, conducting the decision analysis, and obtaining approval for a program. Weak methods and processes in the management of these efforts can result in faulty assumptions and costly errors in the development of new health care ventures, thus preventing the achievement of financial and operating goals. This article reviews the stages of business planning, and the points at which success may be impaired.

Leasing capital assets and durable goods: opinions and practices in Florida hospitals.

Although leasing is a major source of financing for hospital capital acquisitions, the rationale for choosing leasing over conventional financing is not clear. This article examines academic and leasing company views, and then surveys hospital executives to obtain their views.

Assessing the requirements of hospital-sponsored child daycare.

Staff shortages have made many hospitals consider providing child daycare for employees. This article summarizes employee expectations and the market findings of an analysis conducted at Shands Hospital at the University of Florida. It evaluates the financial feasibility of a child daycare center and discusses factors that make child daycare a questionable business venture. It also looks at strategies for enhancing available child daycare without providing services directly.