Efficiency and profitability in US not-for-profit hospitals.

This article examines the relationship between hospital profitability and efficiency. A cross-section of 1317 U.S. metropolitan, acute care, not-for-profit hospitals for the year 2015 was employed. We use a frontier method, stochastic frontier analysis, to estimate hospital efficiency. Total margin and operating margin were used as profit variables in OLS regressions that were corrected for heteroskedacity. In addition to estimated efficiency, control variables for internal and external correlates of profitability were included in the regression models. We found that more efficient hospitals were also more profitable. The results show a positive relationship between profitability and size, concentration of output, occupancy rate and membership in a multi-hospital system. An inverse relationship was found between profits and academic medical centers, average length of stay, location in a Medicaid expansion state, Medicaid and Medicare share of admissions, and unemployment rate. The results of a Hausman test indicates that efficiency is exogenous in the profit equations. The findings suggest that not-for-profit hospitals will be responsive to incentives for increasing efficiency and use market power to increase surplus to pursue their objectives.

An economic evaluation of a perindopril-based blood pressure lowering regimen for patients who have suffered a cerebrovascular event.

OBJECTIVES: Cerebrovascular disease (or stroke) is one of the main causes of long-term disability and the second leading cause of death worldwide. The economic impact of stroke is clearly seen, as it is the largest single cause of bed occupancy in hospitals in England and accounts for 6% of hospital costs. This analysis is the first to quantify the economic consequences of a blood pressure lowering regimen based on the PROGRESS study (perindopril-based regimen), for reducing future cardiovascular events. DESIGN: A Markov decision analytical model was used to estimate the cost per quality adjusted life year (QALY) of blood pressure lowering in the treatment of patients presenting with a cerebrovascular event. The health states are based upon Barthel indices for which resource utilisation and health benefits have previously been estimated. SETTING: The participants for the economic analysis were obtained from the PROGRESS study database. 6,105 clinical study participants were recruited through both primary and secondary care centres. PARTICIPANTS: The mean age was 64 years; 70% were male in the original study. INTERVENTIONS: In the PROGRESS study, blood pressure lowering by a perindopril-based regimen was compared to standard care. MAIN OUTCOME MEASURES: Cost per quality adjusted life year for the duration of the study (4 years) and for a time span of 20 years. RESULTS: Using only direct hospital medical costs, the cost per QALY for a perindopril based regimen is pound 6,927 for the base study period and pound 10,133 for a 20-year time period. These results are sensitive to the cost of perindopril, the cost of the stroke unit, length of stay, and to a lesser extent, the cost of indapamide. CONCLUSIONS: This analysis demonstrates a cost-effective treatment for patients suffering a cerebrovascular event with a blood pressure lowering regimen. The findings of this study are in line with current decisions and guidance by the national institute for health and clinical excellence (NICE) in England.