Hospital Cost and Efficiency: Do Hospital Size and Ownership Type Really Matter? Joseph S. Coyne, Michael Thomas Richards, Robert Short, Kim Shultz, and Sher G. Singh
The primary research question this study addresses is, do hospital size and ownership type make a difference in the efficiency and cost results of hospitals in Washington State? A further question is, what factors might explain such differences? The data source is the hospital financial data reports Washington hospitals submit to the Washington Department of Health. The sample was restricted to not-for-profit and government-owned hospitals, given that these ownership types are predominant in Washington State, and there are only two investor-owned hospitals.
The measures of efficiency and cost represent the generally accepted financial indicators derived from the healthcare financial management literature. Cost and efficiency in these hospitals are analyzed using five efficiency ratios and five cost measures. The results are significant for five of the ten measures studied. Measured by occupancy percentage, small and large not-for-profit hospitals appear to achieve higher efficiency levels than government-owned hospitals, but the larger hospitals of both ownership types report greater efficiency than smaller hospitals. In terms of costs, small, not-for-profit hospitals report comparable costs to those of the largest hospitals, likely because 70 percent of the small not-for-profits are critical access hospitals.
These findings deserve further study on a regional or national level. A more scientific study of the efficiency and cost of hospitals by size and ownership type would be important to control for case mix, scope of services, and payer mix. Such studies can generate important findings about the relationship of hospital size and ownership type to efficiency and cost. Conducted on a national level, such studies would provide policymakers with the empirical data they need to make decisions regarding the types of hospitals to encourage and discourage in the future.
The Relationship Between Patient Satisfaction and Inpatient Admissions Across Teaching and Nonteaching Hospitals, Daniel J. Messina, Dennis J. Scotti, Rodney Ganey, and Genevieve Pinto Zipp
The need for healthcare executives to better understand the relationship between patient satisfaction and admission volume takes on greater importance in this age of rising patient expectations and declining reimbursement. Management of patient satisfaction has become a critical element in the day-to-day operations of healthcare organizations pursuing high performance.
This study is guided by two principal research questions. First, what is the nature of the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions in acute care hospitals? Second, does the relationship between patient satisfaction (as measured by scored instruments) and inpatient admissions differ between teaching hospitals and nonteaching hospitals? Although not suggestive of direct causation, the study findings revealed a statistically significant and positive correlation between patient satisfaction and admission volume in teaching hospitals only. In contrast, a nonsignificant, negative correlation was seen between patient satisfaction and admission in nonteaching hospitals. In the combined teaching and nonteaching sample, a statistically significant, negative correlation was found between patient satisfaction scores and admission volume.
With financial performance being driven in part by admission volume and with patient satisfaction affecting hospital patronage, the business case for a strategic focus on patient satisfaction in teaching hospitals is clearly evident. The article concludes with a set of recommendations for strengthening patient satisfaction and organizational performance.
Strategic, Political, and Cultural Aspects of IT Implementation: Improving the Efficacy of an IT System in a Large Hospital, Christina J. Wurster, Benyamin B. Lichtenstein, and Tasha Hogeboom
Healthcare spending will exceed $4 trillion by 2017 a trend that is leading executives to implement information technology (IT) systems to contain these rising costs. Studies show that numerous factors determine the outcome and net benefits of IT in healthcare. However, what happens when a newly implemented IT system results in negative outcomes? We explore this question by examining a newly implemented IT system in a large hospital that was yielding none of the benefits for which its designers had hoped. Using an expanded set of analytic lenses, our in-depth study found that political issues were a major stumbling block to the implementation of this IT system, as the interests of IT managers were different from those of the system’s users. In addition, cultural values among these stakeholders were not aligned.
The new IT system carried very different meanings for these two key groups. These political and cultural issues, which reflect a broader set of factors than is commonly applied in IT or in management, led to specific recommendations designed to improve the system’s viability and benefits. In a follow-up analysis we found that these alternative lenses were valuable in improving the intended usage of the IT system by more than 15 percent and in producing a 20 percent improvement in performance. By better understanding the cultural and political significance of IT implementation, managers may thus improve the effectiveness of new information technologies for containing costs in hospitals.