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The Determinants of Efficiency Factors in Public Hospitals
Rabih Y Zeidan,
University of Houston
Saleha B Khumawala, University of Houston
ABSTRACT. We analyze performance of public hospitals in mid of increasing pressure on state and local governments to meet growing demand for charity care. Analyses of hospitals’ performance indicate significant differences in performance between health-district and city/county hospitals as compared to private not-for-profit hospitals (NFP). Excessive variability in hospitals’ operating margins and financial indicators is associated mainly with size, market concentration, complexity of operations and charity care provision. We find that public hospitals have limited and uncomplicated procedures coupled with low occupancy, higher cost per patient day, low revenue per full-time employee, and no significant difference from NFP hospitals in charity care provision. The study contributes to prior healthcare research by analyzing performance of public hospitals and by documenting similar provision of charity care albeit differences in tax-exemption incentives between public and NFP hospitals.
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