Measuring the Association of the Medicare and Medicaid Revenue Proportions with the Profitability of Washington Hospitals Academic Article uri icon

abstract

  • The predominant theoretical expectation of the association between government health programs (i.e., Medicare and Medicaid) and hospital profitability is that the association is adverse. However, several studies of this association have reported mixed results. The purpose of this study is to provide empirical evidence for the association of Medicare and Medicaid revenue proportion with the profitability of Washington State (WA) hospitals in 2005. This study employs multiple regression models to test established hypotheses pertinent to the association between government health programs and hospital profitability. Key findings of this study are as follows: for WA hospitals that sustained a high proportion of Medicare and Medicaid revenue in 2005, both Medicare mix and Medicaid mix are significantly and negatively associated with hospital profitability; and, for WA hospitals with a high proportion of Medicare and Medicaid revenue that achieved profitable status in 2005, both Medicare mix and Medicaid mix are significantly and negatively associated with hospital profitability. This study suggests that further studies would provide meaningful information to hospital managers and health policymakers. Subjects recommended for further examination include employing a longitudinal design to measure the association between government health programs and hospital profitability; replicating this study using data from different states as well as data from the national level; adding categorical variables to improve the regression model; examining drivers of financial distress in the 10 unprofitable hospitals identified in this study; measuring the association between Medicaid Disproportionate Share Hospital (DSH) payments and hospital profitability; and identifying the association of case mix index and hospital profitability.

published proceedings

  • Biomedical Journal of Scientific & Technical Research

author list (cited authors)

  • Shin, D. Y., & Chang, J.

citation count

  • 0

complete list of authors

  • Shin, Dong Yeong||Chang, Jongwha

publication date

  • December 2020