Analysis of cash flow in academic medical centers in the United States

The Impact of COVID-19 on the Financial Performance of Largest Teaching Hospitals

The COVID-19 pandemic disrupted hospital operations. Anecdotal evidence suggests financial performance likewise suffered, yet little empirical research supports this claim. This study aimed to explore the impact of the pandemic on the financial performance of the most prominent academic hospitals in the United States. Data from the 115 largest major teaching hospitals in the United States were extracted from the American Hospital Directory for three years (2019-2021). We hypothesized that the year and region would moderate the relationship between a hospital's return on assets (financial performance) and specific operational variables. We found evidence through descriptive statistics and multivariate moderated regressions that financial positions rebounded in 2021, mainly through reductions in adjusted full-time employees and liabilities and an increase in non-operating income. Our results also found that the Midwest region significantly outperformed the other three regions, particularly in terms of lower salaries and operational expenses. These findings suggest potential for future initiatives encouraging efficiency and finding alternate sources of income beyond patient income. Hospitals should focus on improving financial reserves, building out non-operational revenue streams, and implementing operational efficiencies to foster better financial resiliency. These suggestions may enable healthcare administrators and facilities to adapt to future pandemics and environmental turbulence.

Impact of External Environmental Dimensions on Financial Performance of Major Teaching Hospitals in the U.S

Teaching hospitals have a unique mission to not only deliver graduate medical education but to also provide both inpatient and ambulatory care and to conduct clinical medical research; therefore, they are under constant financial pressure, and it is important to explore what types of external environmental components affect their financial performance. This study examined if there is an association between the short-term and long-term financial performance of major teaching hospitals in the United States and the external environmental dimensions, as measured by the Resource Dependence Theory. Data for 226 major teaching hospitals spanning 46 states were analyzed. The dependent variable for short-term financial performance was days cash on hand, and dependent variable for long-term financial performance was return on assets, both an average of most recently available 4-year data (2014-2017). Utilizing linear regression model, results showed significance between outpatient revenue and days cash on hand as well as significant relationship between population of the metropolitan statistical area, unemployment rate of the metropolitan statistical area, and teaching hospital's return on assets. Additionally, system membership, type of ownership/control, and teaching intensity also showed significant association with return on assets. By comprehensively examining all major teaching hospitals in the U.S. and analyzing the association between their short-term and long-term financial performance and external environmental dimensions, based upon Resource Dependence Theory, we found that by offering diverse outpatient services and novel delivery options, administrators of teaching hospitals may be able to increase organizational liquidity.

COVID-19: Financial Stress Test for Academic Medical Centers

The coronavirus (COVID-19) pandemic is having profound effects on the lives and well-being of the world's population. All levels of the nation's public health and health care delivery systems are rapidly adjusting to secure the health infrastructure to manage the pandemic in the United States. As the nation's safety net health care systems, academic medical centers (AMCs) are vital clinical and academic resources in managing the pandemic. COVID-19 may also risk the financial underpinnings of AMCs because their cost structures are high, and they may have incurred large amounts of debt over the last decade as they expanded their clinical operations and facilities. This Invited Commentary reviews existing data on AMC debt levels; summarizes relief provided in the Coronavirus Aid, Relief, and Economic Security Act; and suggests policy options to help mitigate risk.

Strategies of High-Performing Teaching Hospitals

Teaching hospitals are large and complex, and under constant financial pressure. In this study, we examine the financial performance of 80 large teaching hospitals in the 20 largest cities in the U.S. over the last five years, to identify which strategic and operational management factors separate high-performing hospitals from lower-performing ones. Results suggest that growth strategies should continue to be sought for improving long-term financial condition. Operational efficiency was less important than market share, economic status of surrounding community, hospital size, and teaching intensity. This study's findings should help guide strategic planning for teaching hospitals.

Hospital compliance with a state unfunded mandate: the case of California's Earthquake Safety Law

Abstract In recent years, community hospitals have experienced heightened regulation with many unfunded mandates. The authors assessed the market, organizational, operational, and financial characteristics of general acute care hospitals in California that have a main acute care hospital building that is noncompliant with state requirements and at risk of major structural collapse from earthquakes. Using California hospital data from 2007 to 2009, and employing logistic regression analysis, the authors found that hospitals having buildings that are at the highest risk of collapse are located in larger population markets, possess smaller market share, have a higher percentage of Medicaid patients, and have less liquidity.

Commentary: health care reform and the finances of academic medical centers

Academic medical centers (AMCs; i.e., teaching hospitals) play a vital role in the U.S. health care system by pursuing a four-part, synergistic mission of clinical care, research, education, and community health. Historically, AMCs have used margins from clinical care to subsidize the cost of the other three missions. As a result, the clinical cost structure of AMCs is higher than other hospitals. The study by McCue and Thompson in this issue of Academic Medicine identifies certain factors (such as Medicaid payer mix) that are associated with the financial success of AMCs. For national health care reform to be successful and for health care to be affordable, all providers across the United States, including AMCs, must aggressively identify and implement opportunities to make care better and more efficient. Policies that shape national health care reform must account for AMCs' higher cost structures. If policy makers ignore these higher cost structures, the ability of AMCs to provide highly specialized services, to care for vulnerable populations, to advance knowledge through biomedical research, to educate the next generation of health professionals, and to improve community health will be at risk.