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Background: Despite the prevalence of evidence-based interventions to improve quality in health care systems, there is a paucity of documented evidence of a financial return on investment (ROI) for these interventions from the perspective of the investing entity.Purposes: To report on a demonstration project designed to measure the business case for selected quality interventions in high-risk high-cost patient populations in 10 Medicaid managed care organizations across the United States.Methodology/Approach: Using claims and enrollment data gathered over a 3-year period and data on the costs of designing, implementing, and operating the interventions, ROIs were computed for 11 discrete evidence-based quality-enhancing interventions.Findings: A complex case management program to treat adults with multiple comorbidities achieved the largest ROI of 12.21:1. This was followed by an ROI of 6.35:1 for a program which treated children with asthma with a history of high emergency room (ER) use and/or inpatient admissions for their disease. An intervention for high-risk pregnant mothers produced a 1.26:1 ROI, and a program for adult patients with diabetes resulted in a 1.16:1 return. The remaining seven interventions failed to show positive returns, although four sites came close to realizing sufficient savings to offset investment costs.Practice Implications: Evidence-based interventions designed to improve the quality of patient care may have the best opportunity to yield a positive financial return if it is focused on high-risk high-cost populations and conditions associated with avoidable emergency and inpatient utilization. Developing the necessary tracking systems for the claims and financial investments is critical to perform accurate financial ROI analyses. [ABSTRACT FROM AUTHOR]

Pay-for-performance programs are being developed to improve quality of care despite limited empirical evidence demonstrating their effectiveness, especially in underserved communities. Using data on 1,166 patients treated by 46 primary care physicians, this paper examines the effect of an innovative pay-for-performance program implemented in 2004 at the nation's largest federally qualified health center on hemoglobin A1c (HbA1c) testing and HbA1c scores. Univariate analysis and logistic regression results show that the pay-for-performance program significantly increased the likelihood that patients received two HbA1c tests per year as recommended by the American Diabetes Association. Ordinary least squares (OLS) regression results reveal that physicians' baseline performance was positively related to performance after program implementation. Finally, OLS regression results suggest that the program did not contribute to improved blood sugar control. The pay-for-performance program appeared to improve compliance with HbA1c testing recommendations, but a more comprehensive strategy, including increased patient support, may be necessary to improve health outcomes in disadvantaged populations. [ABSTRACT FROM AUTHOR]

Purpose: To determine whether inpatient and outpatient charges changed at rural hospitals after a merger., Methods: Hospital mergers were derived from proprietary Irving Levin Associates data through manual review and validation. Hospital-level characteristics were derived from HCRIS, CMS Impact File Hospital Inpatient Prospective Payment System, Hospital MSA file, AHRF, and US Census data. A difference-in-differences approach was used to determine whether inpatient and outpatient charges changed at rural hospitals after a merger. The comparison group, rural hospitals that did not merge at any point during the sample period, was weighted using inverse probability of treatment weights. Key outcome measures were total inpatient and total outpatient charges (logged)., Findings: Hospitals that merged billed 17.73% more inpatient charges and 12.66% more outpatient charges at baseline compared to hospitals that did not merge. Our results indicate that merging was associated with a 3.04% decrease in inpatient charges (P < .001) and a 1.07% increase in outpatient charges (P = .082). Merging was also associated with a 4.38% decrease in total revenue, a 3.58% decrease in net patient revenue, and no change in total inpatient discharges or average daily census., Conclusions & Implications: Merging was strongly associated with a decrease in inpatient charges and somewhat associated with an increase in outpatient charges for rural hospitals. Future work could build upon this work to determine whether acquirers reduce or eliminate certain services at rural hospitals after a merger, and ultimately how changes in service delivery could impact patients in those rural communities., (© 2020 National Rural Health Association.)

Executive Summary: The number of rural hospital mergers has increased substantially in recent years. A commonly reported reason for merging is to increase access to capital. However, no empirical evidence exists to show whether capital expenditures increased at rural hospitals after a merger. We used a difference-in-differences approach to determine whether total capital expenditures changed at rural hospitals after a merger. The comparison group (rural hospitals that did not merge during the 2012 through 2015 study period) was weighted using inverse probability of treatment weights. The key outcome measure was logged total capital expenditures.Merging resulted in a 26% increase in capital expenditures and also was associated with a significant improvement in plant age. The postmerger improvement in plant age may have been partially attributable to merger-related accounting changes and partially attributable to increased capital expenses, possibly on long-term asset renovations and replacement.These findings suggest that through mergers, rural hospital board members and executives who have accepted or are considering a merger may improve a hospital's ability to increase capital expenditures. Further, increased capital investments in rural hospitals may be an important signal to the community that the acquirer intends to keep the rural hospital open and continue providing some volume and level of services within the community. Future research should determine how capital is spent after a merger.

The objective of this study is to determine whether key hospital-level financial and market characteristics are associated with whether rural hospitals merge. Hospital merger status was derived from proprietary Irving Levin Associates data for 2005 through 2016 and hospital-level characteristics from HCRIS, CMS Impact File Hospital Inpatient Prospective Payment System, Hospital MSA file, AHRF, and U.S. Census data for 2004 through 2016. A discrete-time hazard analysis using generalized estimating equations was used to determine whether factors were associated with merging between 2005 and 2016. Factors included measures of profitability, operational efficiency, capital structure, utilization, and market competitiveness. Between 2005 and 2016, 11% (n = 326) of rural hospitals were involved in at least one merger. Rural hospital mergers have increased in recent years, with more than two-thirds (n = 261) occurring after 2011. The types of rural hospitals that merged during the sample period differed from nonmerged rural hospitals. Rural hospitals with higher odds of merging were less profitable, for-profit, larger, and were less likely to be able to cover current debt. Additional factors associated with higher odds of merging were reporting older plant age, not providing obstetrics, being closer to the nearest large hospital, and not being in the West region. By quantifying the hazard of characteristics associated with whether rural hospitals merged between 2005 and 2016, these findings suggest it is possible to determine leading indicators of rural mergers. This work may serve as a foundation for future research to determine the impact of mergers on rural hospitals.

Executive Summary: The objective of this study was to investigate the effect of the Magnet Recognition (MR) signal on hospital financial performance. MR is a quality designation granted by the American Nurses Credentialing Center (ANCC). Growing evidence shows that MR hospitals are associated with various interrelated positive outcomes that have been theorized to affect hospital financial performance.In this study, which covered the period from 2000 to 2010, we applied a pre-post research design using a longitudinal, unbalanced panel of MR hospitals and hospitals that had never received MR designation located in urban areas in the United States. We obtained data for this analysis from Medicare's Hospital Cost Report Information System, the American Hospital Association Annual Survey Database, the Health Resources & Services Administration's Area Resource File, and the ANCC website. Propensity score matching was used to construct the final study sample. We then applied a difference-in-difference model with hospital fixed effects to the matched hospital sample to test the effect of the MR signal, while controlling for both hospital and market characteristics.According to signaling theory, signals aim to reduce the imbalance of information between two parties, such as patients and providers. The MR signal was found to have a significant positive effect on hospital financial performance. These findings support claims in the literature that the nonfinancial benefits resulting from MR lead to improved financial performance. In the current healthcare environment in which reimbursement is increasingly tied to delivery of quality care, healthcare executives may be encouraged to pursue MR to help hospitals maintain their financial viability while improving quality of care.

Objective: This study identifies community and hospital characteristics associated with adoption of telestroke among acute care hospitals in North Carolina (NC)., Methods: Our sample included 107 hospitals located in NC. Our analytic dataset included variables from the American Hospital Association (AHA) annual survey, AHA Health IT supplement, Healthcare Cost Report Information System, and Centers for Disease Control and Prevention's WONDER online database. We supplemented our secondary sources with data on telestroke adoption and market-level variables developed for NC. We used the Consolidated Framework for Implementation Research and previous telehealth studies to guide selection of variables. We conducted a multivariate logistic regression to determine associations with telestroke adoption., Results: Proportion of discharges that are Medicare (odds ratio [OR] = 1.93, P < .04) and total operating margin (OR = 2.89, P = .00) were positively associated with telestroke adoption. Critical access hospital status was positively associated with telestroke adoption, although not at P < .05 (OR = 5.61, P = .07). Distance to the nearest hospital with a telestroke program (OR = .91, P = .01) and volume of emergency department visits (OR = .98, P < .05) were both negatively associated with telestroke adoption., Conclusions: Our study is novel in its focus on telestroke adoption and use of variables not included in previous telehealth analyses. Our findings suggest some hospitals have neither the financial resources nor the ability to pool resources for acquiring needed technology, and differences in adoption may result in geographic inequities in access to telestroke services., (Copyright © 2018 National Stroke Association. Published by Elsevier Inc. All rights reserved.)

Background: Recent emphasis on value-based health care has highlighted the importance of quality improvement (QI) in primary care settings. QI efforts, which require providers and staff to work in cross-functional teams, may be implemented with varying levels of success, with implementation being affected by factors at the organizational, teamwork, and individual levels., Purpose: The purpose of our study was to (a) identify contextual factors (organizational, teamwork, and individual) that affect implementation effectiveness of QI interventions in primary care settings and (b) compare perspectives about these factors across roles (health care administrators, physician and nonphysician clinicians, and administrative staff)., Methods/approach: We conducted semistructured interviews with 24 health care administrators, physician and nonphysician primary care providers, and administrative staff representing 10 primary care practices affiliated with one integrated delivery system., Results: Participants across all roles identified similar organizational- and team-level factors that influence QI implementation including organizational capacity to take on new initiatives (e.g., time availability of physicians), technical capability for QI (e.g., data analysis skills), and team climate (e.g., how well staff work together). There was greater variation in terms of individual-level factors, particularly perceived meaning and purpose of QI. Perceptions about value of QI ranged from positive impacts on patient care and practice competitiveness to decreased efficiency and distractions from patient care, but differences did not appear attributable to role., Conclusions: Successful QI implementation requires effective collaboration within cross-functional teams. Additional research is needed to assess how best to employ implementation strategies that promote cross-understanding of QI among team members and, ultimately, effective implementation of QI programs., Practice Implications: Health care managers in primary care settings should strive to create a strong teamwork climate, reinforced by opportunities for staff in various roles to discuss QI as a collective.

Executive Summary: The recent release by the Centers for Medicare & Medicaid Services of hospital charge and payment data to the public has renewed a national dialogue on hospital costs and prices. However, to better understand the driving force of hospital pricing and to develop strategies for controlling expenditures, it is important to understand the underlying costs of providing hospital services. We use Medicare Provider and Analysis Review inpatient claims data and Medicare cost report data for fiscal years 2008 and 2012 to examine variations in the contribution of "high-tech" resources (i.e., technology/medical device-intensive resources) versus "high-touch" resources (i.e., labor-intensive resources) to the total costs of providing two common services, as well as assess how these costs have changed over time. We found that high-tech inputs accounted for a greater proportion of the total costs of surgical service, whereas medical service costs were primarily attributable to high-touch inputs. Although the total costs of services did not change significantly over time, the distribution of high-tech, high-touch, and other costs for each service varied considerably across hospitals. Understanding resource inputs and the varying contribution of these inputs by clinical condition is an important first step in developing effective cost control strategies.

Objective: This study assessed whether having an electronic health record (EHR) super-user, nurse champion for meaningful use (MU), and quality improvement (QI) team leading MU implementation is positively associated with MU Stage 1 demonstration., Methods: Data on MU demonstration of 596 providers in 37 ambulatory care clinics came from the clinical data warehouse and administrative systems of UNC Health Care. We surveyed the 37 clinics about champions, super-users, and QI teams. We used generalized estimating equation methods with an independence working correlation matrix to account for clustering within clinics and to weight contributions from each clinic according to clinic size., Results: Having a QI team lead MU implementation was significantly associated with MU demonstration (odds ratio, OR = 3.57, 95% CI, 1.83-6.96, P < .001, Table 2). Having neither a nurse champion nor an EHR super-user was significant., Conclusion: Our findings support the alignment of MU with QI efforts by having the QI team lead MU implementation., (© The Author 2016. Published by Oxford University Press on behalf of the American Medical Informatics Association. All rights reserved. For Permissions, please email: journals.permissions@oup.com.)

Rural hospitals differ from urban hospitals in many ways. For example, rural hospitals are more reliant on public payers and have lower operating margins. In addition, enrollment in the health insurance Marketplaces of the Affordable Care Act (ACA) has varied across rural and urban areas. This study employed a difference-in-differences approach to evaluate the average effect of Medicaid expansion in 2014 on payer mix and profitability for urban and rural hospitals, controlling for secular trends. For both types of hospitals, we found that Medicaid expansion was associated with increases in Medicaid-covered discharges. However, the increases in Medicaid revenue were greater among rural hospitals than urban hospitals, and the decrease in the proportion of costs for uncompensated care were greater among urban hospitals than rural hospitals. This preliminary analysis of the early effects of Medicaid expansion suggests that its financial impacts may be different for hospitals in urban and rural locations., (Project HOPE—The People-to-People Health Foundation, Inc.)

Background: Safety-net hospitals (SNHs) tend to be weaker in financial condition than other hospitals, leading to a concern about how the quality of care at these hospitals would compare to other hospitals., Objectives: To assess mortality performance of SNHs using all-payer databases and measures for a broad range of conditions and procedures., Design: Longitudinal analysis of hospitals from 2006 through 2011 with data from the Healthcare Cost and Utilization Project State Inpatient Databases, the American Hospital Association Annual Survey, and the Area Health Resources File., Subjects: A total of 1891 urban, nonfederal, general acute hospitals from 31 states., Methods: SNHs were identified by the percentage of Medicaid and uninsured patients. Hospital mortality performance was measured by 2 composites covering 6 common medical conditions and 4 surgical procedures with risk adjustment for patient characteristics. Differences in each composite between SNHs and non-SNHs were estimated through generalized estimating equations to control for hospital factors and community resources., Results: Inpatient mortality rates declined over time for all hospitals. Small differences in risk-adjusted mortality rates between SNHs and non-SNHs were found only among teaching hospitals. After controlling for hospital factors, these differences were substantially reduced and remained significant only for surgical mortality rates. The small gap in surgical mortality rates diminished in later years., Conclusions: SNHs appeared to perform equally well as other hospitals in medical and surgical mortality measures. Policymakers should continue to monitor the quality of care at SNHs and ensure that it would not decline under the current value-based purchasing program.

Background: The Medicare and Medicaid meaningful use (MU) incentive programs promote adoption and "meaningful use" of certified electronic health records among hospitals and eligible providers in outpatient settings, with a goal of improving the quality of patient care. Despite the potential importance of MU for providers and patients, little is currently known about the practice characteristics that facilitate providers' demonstration of MU. This study examined whether selected practice characteristics were associated with providers' meeting Stage 1 MU objectives at the end of 1 year in a single large North Carolina integrated delivery system., Methods: Our retrospective database analysis included all 702 eligible providers from 54 ambulatory care practices on the main campus of the University of North Carolina Health Care System. We assessed associations between providers' ability to meet Stage 1 MU objectives as of December 2012 and the following practice characteristics: practice specialty, size, and mix of Medicare- and Medicaid-eligible providers., Results: The following practice characteristics were associated with providers' ability to meet MU objectives: primary care practices as compared to specialty practices (odds ratio [OR] = 2.49; 95% CI, 1.11-5.62), small practices as compared to medium-sized practices (OR = 0.29; 95% CI, 0.09-0.89), and the presence of only Medicare-eligible providers in the practice as compared to the presence of only Medicaid-eligible providers (OR = 6.48; 95% Cl, 1.08-38.97)., Limitations: Because our sample was drawn from a single integrated delivery system, results may not be generalizable to all ambulatory practice settings., Conclusions: This study suggests that larger practices, primary care practices, and practices comprised of Medicare-eligible providers may be better able to meet MU objectives. Further research is needed to evaluate strategies that account for practice characteristics and other contextual factors in the MU implementation process.

The number of stand-alone rural hospitals has been shrinking as larger health systems target these hospitals for mergers and acquisitions (M and As). However, little research has focused specifically on rural hospital M and A transactions. Using data from Irving Levin Associates' Healthcare M and A Report and Medicare Cost Reports from 2005 to 2012, we examined two research questions: (1) What were the characteristics of rural hospitals that merged or were acquired, and (2) were there changes in rural hospital financial performance, staffing, or services after an M and A transaction? We used logistic regression to identify factors predictive of merger, and we used multiple regression to examine various hospital measures after an M or A. Study results showed that hospitals with weaker financial performance but lower staffing levels and staffing costs were more likely to merge or be acquired. Statistically weak evidence suggested that operating margins declined after the merger; stronger evidence suggested reductions in salary expense. There was no statistically significant evidence of changes to the number of full-time equivalent (FTE) employees, the service lines that were included in the study, capital expenditures, or the amount of debt financing among the hospitals that merged or were acquired. M and A may not result in a rapid influx of capital, a relief of debt burden, or an improvement in bottom-line profitability. However, M and A may be a viable option for maintaining the hospital and the access to care it provides.

The implementation of the Affordable Care Act has led to a large decrease in the number of uninsured people. Yet uncompensated care will still occur, particularly in states where eligibility for Medicaid is not expanded. We compared rural hospitals in Medicaid expansion and nonexpansion states in terms of the amount of uncompensated care they provided and their profitability and market characteristics in 2013. We found that rural hospitals in expansion states provided more dollars of uncompensated care than those in nonexpansion states and that the difference was at least partly driven by greater uncompensated costs associated with public programs such as Medicaid. We found higher dollar values of unrecoverable debt and charity care among non-critical access rural hospitals in nonexpansion states than among those in expansion states. Compared to hospitals in expansion states, those in nonexpansion states provided greater amounts of uncompensated care as a percentage of revenues and appeared to be more financially vulnerable; thus, these hospitals may be more likely to experience financial pressure or losses. Policy makers need to formulate strategies for maintaining access to care for rural populations residing in nonexpansion states., (Project HOPE—The People-to-People Health Foundation, Inc.)

Objective: To measure the return on investment (ROI) for a pediatric asthma pay-for-reporting intervention initiated by a Medicaid managed care plan in New York State., Design: Practice-level, randomized prospective evaluation., Setting: Twenty-five primary care practices providing care to children enrolled in the Monroe Plan for Medical Care (the Monroe Plan)., Participants: Practices were randomized to either treatment (13 practices, 11 participated) or control (12 practices)., Intervention: For each of its eligible members assigned to a treatment group practice, the Monroe plan paid a low monthly incentive fee to the practice. To receive the incentive, treatment group practices were required to conduct, and report to the Monroe Plan, the results of chart audits on eligible members. Chart audits were conducted by practices every 6 months. After each chart audit, the Monroe Plan provided performance feedback to each practice comparing its adherence to asthma care guidelines with averages from all other treatment group practices. Control practices continued with usual care., Main Outcome Measures: Intervention implementation and operating costs and per member, per month claims costs. ROI was measured by net present value (discounted cash flow analysis)., Results: The ROI to the Monroe Plan was negative, primarily due to high intervention costs and lack of reductions in spending on emergency department and hospital utilization for children in treatment relative to control practices., Conclusions: A pay-for-reporting, chart audit intervention is unlikely to achieve the meaningful reductions in utilization of high-cost services that would be necessary to produce a financial ROI in 2.5 years., (© The Author 2015. Published by Oxford University Press in association with the International Society for Quality in Health Care; all rights reserved.)

Background: Meaningful Use (MU) provides financial incentives for electronic health record (EHR) implementation. EHR implementation holds promise for improving healthcare delivery, but also requires substantial changes for providers and staff. Establishing readiness for these changes may be important for realizing potential EHR benefits. Our study assesses whether provider/staff perceptions about the appropriateness of MU and their departments' ability to support MU-related changes are associated with their reported readiness for MU-related changes., Methods: We surveyed providers and staff representing 47 ambulatory practices within an integrated delivery system. We assessed whether respondent's role and practice-setting type (primary versus specialty care) were associated with reported readiness for MU (i.e., willingness to change practice behavior and ability to document actions for MU) and hypothesized predictors of readiness (i.e., perceived appropriateness of MU and department support for MU). We then assessed associations between reported readiness and the hypothesized predictors of readiness., Results: In total, 400 providers/staff responded (response rate approximately 25%). Individuals working in specialty settings were more likely to report that MU will divert attention from other patient-care priorities (12.6% vs. 4.4%, p = 0.019), as compared to those in primary-care settings. As compared to advanced-practice providers and nursing staff, physicians were less likely to have strong confidence in their department's ability to solve MU implementation problems (28.4% vs. 47.1% vs. 42.6%, p = 0.023) and to report strong willingness to change their work practices for MU (57.9% vs. 83.3% vs. 82.0%, p < 0.001). Finally, provider/staff perceptions about whether MU aligns with departmental goals (OR = 3.99, 95% confidence interval (CI) = 2.13 to 7.48); MU will divert attention from other patient-care priorities (OR = 2.26, 95% CI = 1.26 to 4.06); their department will support MU-related change efforts (OR = 3.99, 95% CI = 2.13 to 7.48); and their department will be able to solve MU implementation problems (OR = 2.26, 95% CI = 1.26 to 4.06) were associated with their willingness to change practice behavior for MU., Conclusions: Organizational leaders should gauge provider/staff perceptions about appropriateness and management support of MU-related change, as these perceptions might be related to subsequent implementation.

Objective: To examine the effect of the recession on the financial performance of safety-net versus non-safety-net hospitals., Data Sources/study Setting: Agency for Healthcare Research and Quality Hospital Cost and Utilization Project State Inpatient Databases, Medicare Cost Reports, American Hospital Association Annual Survey, InterStudy, and Area Health Resource File., Study Design: Retrospective, longitudinal panel of hospitals, 2007-2011. Safety-net hospitals were identified using percentage of patients who were Medicaid or uninsured. Generalized estimating equations were used to estimate average effects of the recession on hospital operating and total margins, revenues and expenses in each year, 2008-2011, comparing safety-net with non-safety-net hospitals., Data Collection/extraction Methods: 1,453 urban, nonfederal, general acute hospitals in 32 states with complete data., Principal Findings: Safety-net hospitals, as identified in 2007, had lower operating and total margins. The gap in operating margin between safety-net and non-safety-net hospitals was sustained throughout the recession; however, total margin was more negatively affected for non-safety-net hospitals in 2008. Higher percentages of Medicaid and uninsured patients were associated with lower revenue in private hospitals in all years, and lower revenue and expenses in public hospitals in 2011., Conclusions: Safety-net hospitals may not be disproportionately vulnerable to macro-economic fluctuations, but their significantly lower margins leave less financial cushion to weather sustained financial pressure., (© Health Research and Educational Trust.)

Background: Health care institutions are scrambling to manage the complex organizational change required for achieving meaningful use (MU) of electronic health records (EHR). Assessing baseline organizational capacity for the change can be a useful step toward effective planning and resource allocation., Purpose: The aim of this article is to describe an adaptable method and tool for assessing organizational capacity for achieving MU of EHR. Data on organizational capacity (people, processes, and technology resources) and barriers are presented from outpatient clinics within one integrated health care delivery system; thus, the focus is on MU requirements for eligible professionals, not eligible hospitals., Methods: We conducted 109 interviews with representatives from 46 outpatient clinics., Findings: Most clinics had core elements of the people domain of capacity in place. However, the process domain was problematic for many clinics, specifically, capturing problem lists as structured data and having standard processes for maintaining the problem list in the EHR. Also, nearly half of all clinics did not have methods for tracking compliance with their existing processes. Finally, most clinics maintained clinical information in multiple systems, not just the EHR. The most common perceived barriers to MU for eligible professionals included EHR functionality, changes to workflows, increased workload, and resistance to change., Practice Implications: Organizational capacity assessments provide a broad institutional perspective and an in-depth clinic-level perspective useful for making resource decisions and tailoring strategies to support the MU change effort for eligible professionals.

Primary care organizations must transform care delivery to realize the Institute for Healthcare Improvement's Triple Aim of better healthcare, better health, and lower healthcare costs. However, few studies have considered the financial implications for primary care practices engaged in transformation. In this qualitative, comparative case study, we examine the practice-level personnel and nonpersonnel costs and the benefits involved in transformational change among 12 primary care practices participating in North Carolina's Improving Performance in Practice (IPIP) program. We found average annual opportunity costs of $21,550 ($6,659 per full-time equivalent provider) for maintaining core IPIP activities (e.g., data management, form development and maintenance, meeting attendance). This average represents the cost of a 50% full-time equivalent registered nurse or licensed practical nurse. Practices were able to limit transformation costs by scheduling meetings during relatively slow patient care periods and by leveraging resources such as the assistance of IPIP practice coaches. Still, the costs of practice transformation were not trivial and would have been much higher in the absence of these efforts. Benefits of transformation included opportunities for enhanced revenue through reimbursement incentives and practice growth, improved efficiency and care quality, and maintenance of certification. Given the potentially high costs for some practices, policy makers may need to consider reimbursement and other strategies to help primary care practices manage the costs of practice redesign.

Background: Provider-based research networks (PBRNs) make clinical trials available in community-based practice settings, where most people receive their care, but provider participation requires both financial and in-kind contributions., Purpose: The aim of this study was to explore whether providers believe there is a business case for participating in PBRNs and what factors contribute to the business case., Methodology/approach: We use a multiple case study methodology approach to examine the National Cancer Institute's community clinical oncology program, a long-standing federally funded PBRN. Interviews with 41 key informants across five sites, selected on the basis of organizational maturity, were conducted using a semistructured interview guide. We analyzed interview transcripts using an iterative, deductive process to identify themes and subthemes in the data., Findings: We found that a business case for provider participation in PBRNs may exist if both direct and indirect financial benefits are identified and included in the analysis and if the time horizon is long enough to allow those benefits to be realized. We identified specific direct and indirect financial benefits that were perceived as important contributors to the business case and the perceived length of time required for a positive return to accrue., Practice Implications: As the lack of a business case may result in provider reluctance to participate in PBRNs, knowledge of the benefits we identified may be crucial to encouraging and sustaining participation, thereby preserving patient access to innovative community-based treatments. The results are also relevant to federally funded PBRNs outside of oncology or to providers considering participation in any clinical trials research.

Extensive research documents disparities in health outcomes for vulnerable populations. Safety-net hospitals-those that serve a greater proportion of vulnerable patients with Medicaid or no insurance-may yield better outcomes for these vulnerable patients because of their expertise with this population. National Inpatient Sample data from 2005-2007 show that predicted rates of complications following colorectal cancer surgery are approximately 20% lower for vulnerable patients in safety-net than in non-safety-net hospitals (0.273 versus 0.340; 95% CI for the difference: -0.11, -0.001). Differences by safety-net status for Medicare and privately-insured patients were smaller and not statistically significant. The lower complication rates are not due to earlier discharge, as vulnerable patients had significantly longer stays at safety-net hospitals (1.79 days; 95% CI 0.13, 3.40). Additional research is needed to determine whether improvement in post-operative outcomes is due to the expertise of safety-net hospitals in caring for patients with Medicaid or no insurance.

Critical Access Hospitals (CAHs) receive cost-based reimbursement from Medicare for inpatient care, including post-acute skilled care provided in swing beds (skilled swing days). Because the reimbursement formula treats swing bed and acute days equally, there is concern that CAH skilled swing days are "overreimbursed" as compared with skilled days provided in other settings. The reimbursement formula is complex; thus, empirical estimates are needed to identify the marginal cost per day to the hospital and the implied Medicare expenditure per day, accounting for fixed cost transfers between services. Using Medicare cost report data, we find that Medicare paid, on average, $581 for the routine portion of a CAH skilled swing day in 2009--more than the estimated marginal cost of $262, but less than the 2009 average per diem of $1,302. Estimates varied widely across the 1,300 CAHs; therefore, payment policy changes would likely have a broad range of effects.

Rationale, Aims and Objectives: Drug-eluting coronary stents (DES) rapidly dominated the marketplace in the United States after approval in 2003, but utilization rates were initially lower among African American patients. We assess whether racial differences persisted as DES diffused into practice., Methods: Medicare claims data were used to identify coronary stenting procedures among elderly patients with acute coronary syndromes (ACS). Regression models of the choice of DES versus bare mental stent controlled for demographics, ACS type, co-morbidities and hospital characteristics. Diffusion was assessed in the short run (2003-2004) and long run (2007), with the effect of race calculated to allow for time-varying effects., Results: The sample included 381,887 Medicare beneficiaries treated with stent insertion; approximately 5% were African American. Initially (May 2003-February 2004), African American race was associated with lower DES use compared to other races (44.3% versus 46.5%, P < 0.01). Once DES usage was high in all patients (March-December 2004), differences were not significant (79.8% versus 80.3%, P = 0.45). Subsequent concerns regarding DES safety caused reductions in DES use, with African Americans having lower use than other racial groups in 2007 (63.1% versus 65.2%, P < 0.01)., Conclusions: Racial disparities in DES use initially disappeared during a period of rapid diffusion and high usage rates; the reappearance of disparities in use by 2007 may reflect DES use tailored to unmeasured aspects of case mix and socio-economic status. Further work is needed to understand whether underlying differences in race reflect decisions regarding treatment appropriateness., (© 2011 Blackwell Publishing Ltd.)

Objective: To determine whether, following implementation of California's minimum nurse staffing legislation, changes in acuity-adjusted nurse staffing and quality of care in California hospitals outpaced similar changes in hospitals in comparison states without such regulations., Data Sources/study Setting: Data from the American Hospital Association Annual Survey of Hospitals, the California Office of Statewide Health Planning and Development, the Hospital Cost Report Information System, and the Agency for Healthcare Research and Quality's Health Care Cost and Utilization Project's State Inpatient Databases from 2000 to 2006., Study Design: We grouped hospitals into quartiles based on their preregulation staffing levels and used a difference-in-difference approach to compare changes in staffing and in quality of care in California hospitals to changes over the same time period in hospitals in 12 comparison states without minimum staffing legislation., Data Collection/extraction Methods: We merged data from the above data sources to obtain measures of nurse staffing and quality of care. We used Agency for Healthcare Research and Quality's Patient Safety Indicators to measure quality., Principal Findings: With few exceptions, California hospitals increased nurse staffing levels over time significantly more than did comparison state hospitals. Failure to rescue decreased significantly more in some California hospitals, and infections due to medical care increased significantly more in some California hospitals than in comparison state hospitals. There were no statistically significant changes in either respiratory failure or postoperative sepsis., Conclusions: Following implementation of California's minimum nurse staffing legislation, nurse staffing in California increased significantly more than it did in comparison states' hospitals, but the extent of the increases depended upon preregulation staffing levels; there were mixed effects on quality., (© Health Research and Educational Trust.)

The Patient Protection and Affordable Care Act (PPACA), signed into law in 2010, is transforming the health care marketplace. This transformation requires health system leaders and health finance scholars to re-examine hospital capital budgeting practices in the context of new delivery models. Within the context of accountable care organizations (ACOs), this article discusses the components of the hospital capital budgeting process, identifies current practices that may require new methods or approaches, and suggests areas where existing or future research can inform capital budgeting going forward. We conclude that while much evidence is available to begin to inform hospital capital budgeting in an ACO, hospital leaders and health finance scholars will need to look to early adopters of the ACO model of care for new knowledge about the most efficient and effective methods of capital allocation.

Not-for-profit hospitals are under increased public scrutiny for providing what some view as insufficient levels of community benefit compared to their tax-exempt benefits. One potential driver of community benefit is financial surplus, which arises from both patient care (operating) activities and non-patient care (non-operating) activities. This study addresses the effect of hospitals' non-operating income on not-for-profit hospitals' provision of community benefit. The study sample includes 217 unique not-for-profit, non-governmental, general, acute care hospitals in California between 1997 and 2010 that filed annual reports with the California Office of Statewide Health Planning and Development (OSHPD). We model the effect of hospitals' operating and non-operating incomes on hospitals' community benefit, controlling for observable hospital characteristics such as scale and system membership, local competition, time trends, and hospital fixed effects. Our results indicate that non-operating income has no effect on levels of community benefit provided by not-for-profit hospitals. This finding suggests that not-for-profit hospitals budget for uncompensated care at levels that are prioritized over other potential investments if non-operating income falls, but remain fixed if non-operating income rises.

Successful participation in the National Cancer Institute's Community Clinical Oncology Program (CCOP) can expand access to clinical trials and promote cancer treatment innovations for patients and communities without access to major cancer centers. Yet CCOP participation involves administrative, financial, and organizational challenges that can affect hospital and provider participants. This study was designed to improve our understanding of challenges associated with CCOP participation from the perspectives of involved providers and to learn about opportunities to overcome these challenges. We conducted five case studies of hospitals and providers engaged with the CCOP. Across organizations, we interviewed 41 key administrative, physician, and nurse informants. We asked about CCOP participation, focusing on issues related to implementation, operations, and organizational support. Challenges associated with CCOP participation included lack of appreciation for the value of participation and poor understanding about CCOP operations, cost, and required workflow changes, among others. Informants also suggested opportunities to facilitate participation: (1) increase awareness of the CCOP, (2) enhance commitment to the CCOP, and (3) promote and support champions of the CCOP. Improving our understanding of the challenges and facilitators of CCOP participation may assist hospitals and providers in increasing and sustaining participation in the CCOP, thus helping to preserve access to innovative cancer treatment options for patients in need.

Background: The translation of research evidence into practice is facilitated by clinical trials such as those sponsored by the National Cancer Institute's Community Clinical Oncology Program (CCOP) that help disseminate cancer care innovations to community-based physicians and provider organizations. However, CCOP participation involves unsubsidized costs and organizational challenges that raise concerns about sustained provider participation in clinical trials., Objectives: This study was designed to improve our understanding of why providers participate in the CCOP in order to inform the decision-making process of administrators, clinicians, organizations, and policy-makers considering CCOP participation., Research Methods: We conducted a multi-site qualitative study of five provider organizations engaged with the CCOP. We interviewed 41 administrative and clinician key informants, asking about what motivated CCOP participation, and what benefits they associated with involvement. We deductively and inductively analyzed verbatim interview transcripts, and explored themes that emerged., Results: Interviewees expressed both "altruistic" and "self-interested" motives for CCOP participation. Altruistic reasons included a desire to increase access to clinical trials and feeling an obligation to patients. Self-interested reasons included the desire to enhance reputation, and a need to integrate disparate cancer care activities. Perceived benefits largely matched expressed motives for CCOP participation, and included internal and external benefits to the organization, and quality of care benefits for both patients and participating physicians., Conclusion: The motives and benefits providers attributed to CCOP participation are consistent with translational research goals, offering evidence that participation can contribute value to providers by expanding access to innovative medical care for patients in need., (Copyright © 2012 Elsevier Inc. All rights reserved.)

Purpose: Medicare cost reports (MCR), Internal Revenue Service form 990s (IRS 990), and audited financial statements (AFS) vary in their content, detail, purpose, timeliness, and certification. The purpose of this study was to compare selected financial data elements and characterize the extent of differences in financial data and ratios across the MCR, IRS 990, and AFS for a sample of nonprofit critical access hospitals (CAHs)., Methods: Line items from AFS of 47 CAHs were compared to data reported in the hospitals' MCR and IRS 990s. Line items were based on 9 financial indicators commonly used to assess hospital financial performance., Findings: Of the indicators examined, the equity financing ratio most frequently matched between the 3 reports, while salaries and benefits to total expenses and debt service coverage were often different. Variances were driven by differences in individual account balances used to construct the ratios. Relative to AFS, cash was frequently lower on the IRS 990 while marketable securities and unrestricted investments were often higher. Other revenue and net income were consistently lower on the MCR and IRS 990, and depreciation was often higher on the MCR. The majority of total assets and fund balance (equity) values matched across the 3 reports, suggesting differences in classification among detailed accounts were more common than variances between the component totals (total assets, total liabilities, and fund balance)., Conclusions: Health policy researchers should consider the impact of these variances on study results and consider ways to improve the availability and quality of financial accounting information., (© 2012 National Rural Health Association.)

Background: The Community Clinical Oncology Program (CCOP) plays an essential role in the efforts of the National Cancer Institute (NCI) to increase enrollment in clinical trials. Currently, there is little practical guidance in the literature to assist provider organizations in analyzing the return on investment (ROI), or business case, for establishing and operating a provider-based research network (PBRN) such as the CCOP. In this article, the authors present a conceptual model of the business case for PBRN participation, a spreadsheet-based tool and advice for evaluating the business case for provider participation in a CCOP organization., Methods: A comparative, case-study approach was used to identify key components of the business case for hospitals attempting to support a CCOP research infrastructure. Semistructured interviews were conducted with providers and administrators. Key themes were identified and used to develop the financial analysis tool., Results: Key components of the business case included CCOP start-up costs, direct revenue from the NCI CCOP grant, direct expenses required to maintain the CCOP research infrastructure, and incidental benefits, most notably downstream revenues from CCOP patients. The authors recognized the value of incidental benefits as an important contributor to the business case for CCOP participation; however, currently, this component is not calculated., Conclusions: The current results indicated that providing a method for documenting the business case for CCOP or other PBRN involvement will contribute to the long-term sustainability and expansion of these programs by improving providers' understanding of the financial implications of participation., (Copyright © 2011 American Cancer Society.)

Objective: To estimate the effect of minimum nurse staffing ratios on California acute care hospitals' financial performance., Data Sources/study Setting: Secondary data from Medicare cost reports, the American Hospital Association's (AHA) Annual Survey, and the California Office of Statewide Health Planning and Development (OSHPD) are combined from 2000 to 2006 for 203 hospitals in California and 407 hospitals in 12 comparison states., Study Design: The study employs a difference-in-difference analytical approach. Hospitals are grouped into quartiles based on pre-regulation nurse staffing levels in adult medical-surgical and pediatric units (quartile 1=lowest staffing). Differences in operating margin, operating expenses per day, and inpatient operating expenses per discharge for California hospitals within a staffing quartile during the period of regulation are compared to differences at hospitals in comparison states during the same period., Data Collection/extraction Methods: Hospital data from Medicare cost reports are merged with nurse staffing measures obtained from AHA and from OSPHD., Principal Findings: Relative to hospitals in comparison states, operating margins declined significantly for California hospitals in quartiles 2 and 3. Operating expenses increased significantly in quartiles 1, 2, and 3., Conclusions: Implementation of minimum nurse staffing legislation in California put substantial financial pressure on some hospitals., (© Health Research and Educational Trust.)

Many not-for-profit (NFP) hospitals hold substantial cash reserves. Using a national sample of 608 NFP hospitals over the period 1996-1999, we related theories of cash holdings to NFP hospitals to develop a conceptual framework for understanding cash holdings. We tested whether these hospitals differentially managed operating and strategic cash with respect to establishing target balances and investigated motivations for holding cash. NFP hospitals actively targeted levels of operating cash, but did not target strategic cash balances. Strategic cash balances were positively related to profitability and growth in assets, but negatively associated with the use of debt.

This study assesses whether California's minimum nurse staffing legislation affected the amount of uncompensated care provided by California hospitals. Using data from California's Office of Statewide Health Planning and Development, the American Hospital Association Annual Survey and InterStudy, the authors divide hospitals into quartiles based on preregulation staffing levels. Controlling for other factors, they estimate changes in the growth rate of uncompensated care in the three lowest staffing quartiles relative to the quartile of hospitals with the highest staffing level. The sample includes short-term general hospitals over the period 1999 to 2006. The authors find that growth rates in uncompensated care are lower in the first three staffing quartiles as compared with the highest quartile; however, results are statistically significant only for county and for-profit hospitals in Quartiles 1 and 3. The authors conclude that minimum nurse staffing ratios may lead some hospitals to limit uncompensated care, likely due to increased financial pressure.

Many not-for-profit hospitals hold large portfolios of financial investments, making them vulnerable to fluctuations in market performance. This article examines the association of bond and equity market performance with investment in property, plant, and equipment by 194 not-for-profit general hospitals in California over the period 1997 to 2006. The study combines retrospective panel data from the California Office of Statewide Health Planning and Development with year-end returns on the S&P 500 and ten-year US Treasury bonds. Using fixed-effects regression, we find a significant positive association between S&P 500 performance and hospitals' capital investment; investment is not correlated with ten-year Treasury bond performance.

The delivery of health care is a capital-intensive industry, and thus, hospital investment strategy continues to be an important area of interest for both health policy and research. Much attention has been given to hospitals' capital investment policies with relatively little attention to investments in financial assets, which serve an important role in not-for-profit (NFP) hospitals. This study describes and analyzes trends in aggregate asset structure between NFP and investor-owned (IO) hospitals during the post-capital-based prospective payment system implementation period, providing the first documentation of long-term trends in hospital investment. The authors find hospitals' aggregate asset structure differs significantly based on ownership, size, and profitability. For both NFP and IO hospitals, financial securities have remained consistent over time, while fixed asset representation has declined in IO hospitals.

Growing interest in pay-for-performance and the level of chief executive officers' (CEOs') pay raises questions about the link between performance and compensation in the health sector. This study compares the compensation of nonprofit hospital CEOs in Ontario, Canada to the three longest reported and most used measures of hospital financial performance. Our sample consisted of 132 CEOs from 92 hospitals between 1999 and 2006. Unbalanced panel data were analyzed using fixed effects regression. Results suggest that CEO compensation was largely unrelated to hospital financial performance. Inflation-adjusted salaries appeared to increase over time independent of hospital performance, and hospital size was positively correlated with CEO compensation. The apparent upward trend in salary despite some declines in financial performance challenges the fundamental assumption underlying this article, that is, financial performance is likely linked to CEO compensation in Ontario. Further research is needed to understand long-term performance related to compensation incentives.

Context: Rural hospitals are heavily dependent on Medicare for their long-term financial solvency. A recent change to Medicare prospective payment system reimbursement--the occupational mix adjustment (OMA) to the wage index--has attracted a great deal of attention in rural policy circles., Purpose: This paper explores variation in the OMA across and within urban and rural markets. Reasons why the effect of the OMA has been less than some rural advocates anticipated are discussed., Methods: Data were obtained from the fiscal year 2007 Final Occupational Mix Survey Data Public Use File and the fiscal year 2007 Final Rule Wage Data Public Use File. Descriptive statistics were generated to determine the need for the OMA and the potential impact of its application on hospitals located in rural markets., Findings: The average OMA for nonmetropolitan markets is greater than 1, indicating that hospitals in these markets use a less-skilled mix of labor than the national average. However, almost one third of nonmetropolitan markets had an OMA that was less than 1 and experienced a net decrease in Medicare reimbursement due to the OMA., Conclusions: There are several reasons why the impact of the OMA is smaller than many rural hospital administrators expected. The most important is that the adjustment happens at the market-level rather than for individual hospitals, so a small hospital's staffing mix may have almost no effect on the final payment adjustment. In rural markets, it appears that hospitals in micropolitan areas exert a large influence on the OMA.

One of the major reasons providers give for not implementing promising quality-enhancing interventions (QEI) is that no "business case" for quality has been made. This article clarifies the concepts of the business case for quality and the related economic case for quality and identifies the perspectives of the various actors in health care financing, production, and consumption decisions. A methodology to evaluate the business case for quality from the perspective of payers and providers is presented. The article then uses implemented QEIs to show how a pay-for-performance (P4P) program can alter the business cases for payers and providers. Specifically, the P4P programs described in this article allow a provider to implement a QEI with the financial alignment of the payer in order to achieve financial and non-financial benefits. In some cases, providers and payers may be able to establish P4P programs providing net benefits for both parties.

Objective: To describe the steps in developing a business case for quality-enhancing interventions (QEIs) in health care., Analysis: The development of a business case for QEIs in health care involves 11 steps. These steps include (1) describing the intervention, (2) determining perspective, (3) identifying the effects of the intervention on quality, (4) designing the study, (5) identifying and measuring cash flows, (6) considering the effects of capacity constraints, (7) selecting a measure of return on investment, (8) determining the time horizon for the analysis, (9) determining the discount rate, (10) adjusting costs and savings for inflation, and (11) determining organizational readiness for business case development. A checklist offers guidance on assessing readiness for the business case., Conclusion: The absence of a 'business case' for quality is frequently cited as the reason health care organizations do not implement QEIs, despite decades of careful research demonstrating their effectiveness. Our continuing commitment to advancing the discipline of business case analysis is based on a belief that delineating the cost and economic implications of investments in QEIs is a critical threshold issue to widespread adoption of evidence-based quality improvements. We believe it is appropriate and timely to consider how best to standardize approaches and move the field of business case analysis forward.

Not-for-profit hospitals are complex organizations and, therefore, may face unique challenges in responding to financial incentives for quality. In this research, we explore the types of behavioural changes made by not-for-profit Michigan hospitals in response to a pay-for-performance system for quality. We also identify factors that motivate or facilitate changes in effort. We apply a conceptual framework based on agency theory to motivate our research questions. Using data derived from structured interviews and surveys administered to 86 hospitals participating in a pay-for-performance system, we compare hospitals reporting and not reporting behavioural changes. Separate analyses are performed for hospitals reporting structure-related changes and hospitals reporting process-related changes. Our findings confirm that hospitals respond to incentive payments; however, our findings also reveal that hospital responses are not universal. Rather, involvement by boards of trustees, willingness to exert leverage with physicians, and financial and competitive motivations are all associated with hospitals' behavioural responses to incentives. Results of this research will help inform payers and hospital managers considering the use of incentives about the nature of hospitals' responses.

One increasingly popular mechanism for stimulating quality improvements is pay-for-performance, or incentive, programs. This article examines the cost-effectiveness of a hospital incentive system for heart-related care, using a principal-agent model, where the insurer is the principal and hospitals are the agents. Four-year incentive system costsfor the payer were dollar 22,059,383, composed primarily of payments to the participating hospitals, with approximately 5 percent in administrative costs. Effectiveness is measured in stages, beginning with improvements in the processes of heart care. Care process improvements are converted into quality-adjusted life years (QALYs) gained, with reference to literatures on clinical effectiveness and survival. An estimated 24,418 patients received improved care, resulting in a range of QALYs from 733 to 1,701, depending on assumptions about clinical effectiveness. Cost per QALY was found to be between dollar 12,967 and dollar 30,081, a level well under consensus measures of the value of a QALY.

Recent reports in the United States and Canada provide evidence that healthcare systems routinely fail to deliver safe and high-quality healthcare services. Governments and other healthcare payers have begun to experiment with pay-for-performance programs that offer healthcare providers and organizations financial incentives for quality. The purpose of this paper is (1) to provide an overview of the design of major pay-for-performance programs in the United States, the United Kingdom, and Australia, with specific focus on government-sponsored programs, and (2) to articulate some considerations for potential implementation of pay-for-performance in Canada.

Background: Because health care resources are limited, therapeutic regimens should be assessed for their relative costs and effectiveness., Objective: We assessed cost-effectiveness for treating psoriasis using two strategies: one consisted principally of methotrexate and the other was principally a rotational schedule of modified cyclosporine (Neoral) with methotrexate., Methods: We performed a cost-effectiveness analysis using a computerized decision analytic model of simulated patients with moderate to severe psoriasis. Patients were randomly assigned to receive treatment with one of the two strategies. Direct costs included acquisition of medications, laboratory and physician fees, and costs of treating side effects. Because of uncertainty regarding rates of clearing of psoriasis, the relative efficacy of methotrexate and cyclosporine was varied over a wide range in a sensitivity analysis., Results: In the base case over a 10-year treatment period, the methotrexate strategy cost $33,000 and provided approximately 2 years clear of psoriasis compared with $38,000 and approximately 4 years clear of psoriasis for the rotational strategy. When the relative effectiveness of cyclosporine to methotrexate in clearing psoriasis varied from approximately 1 to 20, the rotational strategy cost from $4100 to $2700 per incremental clear year., Conclusion: In selecting therapies for psoriasis patients, both costs and effectiveness should be considered. In this simulation, patients could obtain additional periods clear of psoriasis at an incremental cost by using cyclosporine in rotation with methotrexate. If even a small utility gain accompanies the complete clearing of psoriasis, such a strategy may be a worthwhile investment of resources comparable to other healthcare interventions.

Cost-effectiveness studies are rising in importance as means for justifying expenditures on health interventions and as guides for making treatment and resource allocation decisions. However, the term "cost-effective" often is used erroneously, attributed to therapies that have not been subjected to rigorous cost analysis or comparison to an appropriate alternative. Health economic studies include cost-of-illness, cost-minimization, cost-effectiveness, cost-utility, and cost-benefit analyses. Each of these types of analyses differs in what it measures and under what circumstances its use is appropriate. This article describes the different types of economic studies, using examples to highlight their key features, and provides a summary of the key components of an economic analysis including perspective, cost and outcomes measurement, time horizon, cost-discounting, and sensitivity analysis.

Through discussions with chief financial officers of leading health care systems, insights are offered on preferences for project financing and development efforts. Data from these same systems provide at least anecdotal evidence in support of pecking-order theory.

The capital structures (the relative use of debt and equity to support assets) of leading health care systems are viewed as a strategic component of their financial plans. While not-for-profit hospitals as a group have maintained nearly constant levels of debt over the past decade, investor-owned hospitals and a group of leading health care systems have reduced their relative use of debt. Chief financial officers indicated that in addition to reducing debt because of less favorable reimbursement incentives, there was a focus on maintaining high bond ratings. Debt levels have not been reduced as sharply in these health care systems as they have in investor-owned hospitals, in part due to the use of debt to support investments in financial markets. Because these health care systems do not have easy access to equity, high bond ratings and solid investment earnings are central to their capital structure policies of preserving access to debt markets.