Sustaining High and Low Profitability in Washington Hospitals

Abstract

The organizational and operational characteristics of 104 Washington hospitals with sustained high profitability and sustained low profitability were compared using operating margin and return on asset measures. Over the years 2011, 2012, and 2013, approximately 15% to 25% of hospitals were defined as having sustained high-profits or low-profits, respectively. In multivariate analyses only a lower outpatient mix is a significant determinant of high-profits with both measures. For operating margin, system membership, revenues per employee and accreditation status are uniquely significant. For return on assets, only a higher sub-acute care percentage is uniquely significant. As with the study of Langland, Gapenski, and Vogel (1996) concerning hospitals in Florida, there were few determinants of sustained high and low profitability, and some of the factors are under the control of management.