Assessing the Differences and Similarities Between Hospital Chains and Independents Regarding Revenues, Profits, and Community Contributions

Abstract

Hospital systems or chains continue to grow their market share relative to independent hospitals. This trend generates concerns among health care industry observers as historical performance suggests chains charge more for health care services than the independents while providing reduced contributions to their community. This study empirically assesses key performance measures of 67 acute-care hospitals in Virginia by testing if there are differences between chains and independents regarding total patient revenues, revenues per admission, profitability and community support, including charity care, bad debt, taxes paid and Medicaid participation. Implications to industry policy-makers as well as to hospital executives and marketing managers are then presented.

KEYWORDS:

• charity care guidelines
• community contributions/support
• hospital chains
• independent hospitals
• pricing comparisons
• profitability measures

Notes

¹Includes charity care, bad debt, and taxes paid.

²The amount of patient days for patients enrolled in the Medicaid program in relation to total patient days, adjusted to account for outpatient services.