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The Influence of Ownership on Hospital Financial Performance Strategies

37 Pages Posted: 14 Nov 2003  

Leslie Eldenburg

University of Arizona

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems

Date Written: September 14, 2003

Abstract

This paper analyzes the effects of hospital ownership on three specific strategies to improve financial performance. These strategies include (1) spending on advertising to increase revenues through increased market share and premium prices; (2) spending on accounting systems to cut costs, increase accounts receivable collections, or increase legitimacy with stakeholders and donors; and (3) improving efficiency through professional administration. We analyze California hospital expenditures on advertising, accounting, and administration for the period 1998 to 2000 to determine differences in these strategies across ownership type. We also examine the relationships among these expenditures and revenues and excess income margins. We find differences in strategies by ownership, i.e., for-profit hospitals emphasize advertising whereas government hospitals emphasize accounting. We also find that expenditures on advertising, accounting, and administration are positively related to margins for some hospitals.

Suggested Citation

Eldenburg, Leslie and Krishnan, Ranjani, The Influence of Ownership on Hospital Financial Performance Strategies (September 14, 2003). Organizational Economics of Health Care Conference 2003. Available at SSRN: https://ssrn.com/abstract=468422 or http://dx.doi.org/10.2139/ssrn.468422

Leslie G. Eldenburg (Contact Author)

University of Arizona ( email )

McClelland Hall Room 301H
Tucson, AZ 85721
United States
520-621-4585 (Phone)
520-621-3742 (Fax)

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-353-4687 (Phone)
517-432-1101 (Fax)

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