The Privatization of Public Hospitals: Its Impact on Financial Performance. (June 2020)

• Record Type: Journal Article
• Authors: Ramamonjiarivelo, Zo; Weech-Maldonado, Robert; Hearld, Larry; Pradhan, Rohit; Davlyatov, Ganisher K.
• Is Part Of: Medical care research and review. Volume 77:Number 3(2020)
• Page Start: 249
• Page End: 260
• Publication Date: 2020-06
• Subjects: public hospitals -- privatization -- financial performance; Medical care -- United States -- Periodicals; Medical care -- Periodicals; Medical care -- Research -- United States -- Periodicals; Medical care -- Research -- Periodicals; Medical economics -- United States -- Periodicals; Medical economics -- Periodicals; 362.10973
• DOI: 10.1177/1077558718781606
• Languages: English
• ISSNs: 1077-5587

Abstract

This study examined the effects of public hospitals' privatization on financial performance. We used a sample of nonfederal acute care public hospitals from 1997 to 2013, averaging 434 hospitals per year. Privatization was defined as conversion from public status to either private not-for-profit (NFP) or private for-profit (FP) status. Financial performance was measured by operating margin (OM) and total margin (TM). We used hospital level and year fixed effects linear panel regressions with nonlagged independent and control variables (Model 1), lagged by 1 year (Model 2), and lagged by 2 years (Model 3). Privatization to FP was associated with 17% higher OM (Model 2) and 9% higher OM (Model 3), compared with 3%, 4%, and 6% higher OM for privatization to NFP for all three Models, respectively. Privatization to FP was associated with 7% higher TM (Model 2) and privatization to NFP was associated with 2% higher TM (Model 3).