Moving the Needle: Evaluating the Impact of New Care Delivery Models on Hospital Profitability

Abstract

Objective: To evaluate the impact of emerging care delivery models on hospital profitability.

Data Sources/Study Setting: Data was collected from the 2014 American Hospital Association (AHA) survey.

Study Design: We used binary logistic regression analyses to assess the relationships between historically significant and recent evolutionary hospital care delivery characteristics and profitability measures. We considered four profitability measures: operating margin, net patient revenues, net income and return on assets. Our independent variables of interest focused on hospitalist staffing, patient centered medical home and accountable care organizational development.

Data: We had a usable sample of 2,049 hospitals from the AHA dataset.

Principal Findings: Our findings suggest medical home development is significantly associated with improved financial performance across four profitability measures – operating margin, net patient revenue, net income and return on assets. Hospitalists are associated with improved operating margin and net patient revenue. Accountable Care Organizations were neither positively or negatively associated with any measures of financial performance.

Conclusions: Hospitals that have progressively taken steps to adopt patient centered medical homes as a care delivery modality appear be well positioned to have stronger organizational financial performance. Additional organizational enhancements such as hiring hospitalists are associated with better financial performance.