title: The role of non-financial performance measures in predicting hospital financial performance: the case of for-profit system hospitals.
abstract: Non-financial measures have found increasing acceptance in the business world--however, their application in the health care industry remains limited. The purpose of this article is to understand the influence of non-financial measures (efficiency, productivity, and quality) on the financial performance of for-profit system hospitals. The sample consists of 499 for-profit system hospitals in the United States from 1999 to 2002. Data analyzed include the American Hospital Association's Annual Survey, Medicare Cost Reports, Joint Commission's quality scores, and the Centers for Medicare & Medicaid Services' Hospital Case Mix Index. Dependent variables consist of financial measures (operating and total margins), while independent variables include measures of efficiency, productivity, and quality. Our results suggest the influence of non-financial performance measures on financial performance; occupancy rate positively influences financial performance while greater labor intensity may have negative implications for financial performance. In addition, we show that quality positively influences financial performance thereby offering a potential business case for quality. This result has important managerial and policy implications as it may incentivize capital and human resource investments required to improve hospital quality of care.
authors.affiliation: Institute of Statistics and Information Systems, School of Business Administration, University of Puerto Rico, Rio Piedras Campus. heltie.velezgonzalez@uprrp.edu
authors.forename: Heltie
authors.initials: H
authors.lastname: Vélez-González
authors.forename: Rohit
authors.initials: R
authors.lastname: Pradhan
authors.forename: Robert
authors.initials: R
authors.lastname: Weech-Maldonado
mesh_terms: D017598:Efficiency, Organizational / Q000191:economics*; D005544:Forecasting; D019538:Health Care Surveys; D006777:Hospitals, Proprietary / Q000191:economics*; D006801:Humans; D019984:Quality Indicators, Health Care; D012044:Regression Analysis; D014481:United States