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By Jeffrey Stensland, Zachary R. Gaumer, and Mark E. Miller

doi: 10.1377/hlthaff.2009.0599

Private-Payer Profits Can Induce

HEALTH AFFAIRS 29,
NO. 5 (2010): –
©2010 Project HOPE—
The People-to-People Health

Negative Medicare Margins Foundation, Inc.

Jeffrey Stensland
(JStensland@medpac.gov) is a
ABSTRACT A common assumption is that hospitals have little control over principal policy analyst at the
their costs and must charge high rates to private health insurers when Medicare Payment Advisory
Commission (MedPAC) in
Medicare rates are lower than hospital costs. We present evidence that Washington, D.C.
contradicts that common assumption. Hospitals with strong market
Zachary R. Gaumer is a senior
power and higher private-payer and other revenues appear to have less analyst at MedPAC.
pressure to constrain their costs. Thus, these hospitals have higher costs
Mark E. Miller is the
per unit of service, which can lead to losses on Medicare patients.
executive director of MedPAC.
Hospitals under more financial pressure—with less market share and less
ability to charge higher private rates—often constrain costs and can
generate profits on Medicare patients.

H
ospitals’ profit margins on
privately insured patients have
risen dramatically in recent
years, while profit margins on
Medicare patients have fallen.
Payment and cost data gathered by the American
Hospital Association (AHA) reveal that the aver-
age payment-to-cost ratio for privately insured
patients rose from 116 percent of costs in 1999 to
132 percent of costs in 2007.1–4
At the same time, the average payment-to-cost
ratio for Medicare patients fell from 107 percent
of allowable costs to 94 percent. Medicare profit-
ability fell because costs rose faster than the
3 percent annual increase in Medicare payment
rates that occurred from 1999 to 2007. This pa-
per explores the reasons why private-payer profit
margins are inversely related to Medicare profit
margins.
In this paper we argue that high profits that
hospitals earn on payments from private payers
are a key reason that Medicare margins have
declined. First, using a national data set of all
of the hospitals participating in the Medicare
prospective payment system (PPS), we show that
hospitals with high profits from non-Medicare
sources have had higher costs per unit of service
than hospitals with limited resources. These
higher costs result in lower Medicare margins
because costs do not affect Medicare revenues,
which for hospitals are largely based on predeter-
mined payment rates. The apparent chain of cau-
sation is as follows. Strong market power leads
hospitals to reap higher revenues from private
payers. This in turn leads these hospitals to have
weaker cost controls. The weaker cost controls
lead to higher costs per unit of service. As a
result, hospitals have a narrower margin on their
Medicare business.
To corroborate our empirical findings, we con-
ducted data analyses of hospitals in two cities.
Newspapers in these cities have identified cer-
tain hospitals as having strong market positions
that allow them to generate substantial revenues
from private payers.5,6
One of these markets is in Massachusetts,
where the attorney general has recently shown
that prices paid by a single insurer to the highest-
paid hospitals are roughly double the rates paid
to the lowest-paid hospitals.7 The attorney gen-
eral’s preliminary report finds that these price
differentials are associated with market power
rather than purely with the complexity of pa-
tients’ health care needs.
The newspaper accounts of the two markets
focused on differences in resources among hos-

M AY 2 01 0 2 9 :5 HEA LT H AF FA IR S 1
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pitals in the two markets—in effect, the “haves”
and the “have nots.” But the accounts provide
little data on differences in costs. If the hypoth-
esis that financial resources affect costs is
correct, then we should see that hospitals high-
lighted as having relatively high levels of finan-
cial resources should have higher costs per
discharge. In other words, the “haves” should
have higher costs than the “have nots” after ad-
justing for case-mix and other factors.
What Causes Negative Medicare
Margins?
Our hypothesis is that hospitals that have a sig-
nificant number of private-payer patients and
the market power to obtain strong rates from
private insurers will tend to have relatively
strong levels of financial resources (Exhibit 1).
When nonprofit hospitals have more resources,
they tend to spend those resources because non-
profit hospitals do not have shareholders to dis-
tribute profits to. The nonprofit hospital’s
expenditures could be on service-line expan-
sions, such as a new cardiac surgery wing; on
acquiring physician practices; on patient amen-
ities, such as larger rooms; or on other capital
expenditures that help the hospital maintain
and expand its market share of private-payer
patients.
In this paper we find that these expenditures
lead to higher costs per discharge and lower
profits on Medicare patients. In contrast, we find
that when for-profit hospitals have high profits
from non-Medicare sources, they tend to retain
the additional profits for shareholders instead of
increasing their cost structure.
An alternative argument is the traditional cost-
EXHIBIT 1
Hypotheses On The Relationship Between Private-Payer Prices And Medicare Costs
(B) Alternative hypothesis: costs drive private-payer rates
Exogenous costs Low Medicare
Fixed Medicare prices margin
SOURCE Authors’ illustration of hypotheses.
2 H E ALT H AF FAI RS M AY 2 0 1 0 2 9 :5
shifting argument, which suggests an opposite
flow of causation. It starts with the assumption
that costs are largely outside hospitals’ control
(Exhibit 1). It then contends that when external
forces, such as technology or market prices,
cause costs of care to be higher than normally
fixed Medicare prices, hospitals ask private in-
surers to increase their payment rates to cover
their losses on Medicare patients.
The traditional theory of cost shifting rests on
the assumption that hospitals have market
power that they will only use if they face financial
stress as a result of uncompensated care costs or
inadequate payments from certain payers.8 This
assumption implies that hospitals do not maxi-
mize profits or maximize revenues.
Empirical testing of the cost-shift hypothesis
has found mixed results.9 Some argue that cost
shifting is minimal because of competition.10
Others argue that hospitals respond to financial
pressure in a number of ways. These can include
increasing their rates charged to private payers
when they face a revenue shortfall—in other
words, cost shifting—and reducing cost
growth.11,12 Further, some have implied that if
Medicare paid hospitals more, hospitals would
agree to obtain less from private insurers, and
insurers would lower premiums for employers
and consumers.13
The empirical estimates of the magnitude of
cost shifting often rest on models that implicitly
assume that hospitals are minimizing costs.14
When these traditional models find that low
Medicare payment-to-cost ratios are associated
with higher prices charged to private payers,
they assume that it is the low Medicare pay-
ment-to-cost ratios that are driving high
prices—not that high prices are driving higher
High cost Low Medicare
structure margin
Hospitals raise
Financial rates to private
stress payers to cover
Medicare losses
costs. In this paper we argue that the assumption
that revenues do not affect costs is flawed.
The Testable Hypotheses
To examine whether the data match our hypoth-
esis or the alternative hypothesis, we tested two
empirical questions (Exhibit 2). First, we exam-
ined all 2,950 U.S. hospitals that had complete
Medicare Cost Report data during 2002–2007
(excluding Critical Access Hospitals). We tested
whether the subset of these hospitals with sub-
stantial financial resources had higher standard-
ized costs per discharge than the subset with
limited financial resources. If financial resources
are correlated with costs per discharge, then any
association between markups to private payers
and low profits earned on Medicare could be
primarily due to these high private-payer mark-
ups’ driving high cost structures.
Second, we asked whether hospitals with the
largest losses on their Medicare business tend to
be hospitals under the most financial strain. If
high prices paid by private payers drive costs up,
as we hypothesize, then we would expect hospi-
tals with the largest Medicare losses to often have
high profits earned on payments from private
payers, as well as high costs overall and average
or better overall profitability stemming from
those high private-payer profits. Under the alter-
native hypothesis, if costs are exogenous, then
we should expect hospitals in the same market to
have similar levels of costs and similar levels of
Medicare profits. If anything, under the alterna-
tive hypothesis, higher costs and larger Medicare
losses would be associated with lower overall
profitability at the hospital.
Data On Costs And Financial
Resources
Standardizing Costs The heart of our argu-
ment is that hospitals’ financial resources affect
their costs per discharge. Therefore, the meas-
urement of hospitals’ costs per discharge is
important.
To make costs comparable across hospitals, we
adjusted for differences in the services provided
at different hospitals. We computed costs per
discharge by starting with reported costs from
the hospitals’ Medicare Cost Reports and ad-
justed for the severity of cases by classifying
Medicare Provider Analysis and Review (Med-
PAR) file claims according to 3M’s All Patient
Refined Diagnosis-Related Groups (APR-DRGs).
We standardized costs this way because these
diagnosis-related groups allow a sizeable
amount of differentiation of expected resource
use among patients based on the severity of
the case.
However, this approach does not adequately
account for outlier cases with very high expected
costs. Our research finds that such cases tend to
be concentrated at hospitals that attract more
transfer cases and whose patients are more
severely ill on admission. Therefore, we think
that at least part of the outlier cost reflects differ-
ences in patient need and is not purely attribut-
able to differences in efficiency.
To adjust for outliers, we removed an amount
equal to the Centers for Medicare and Medicaid
Services (CMS) payment for outliers from our
computation of costs for each case. We also ad-
justed for differences in local wages, the cost of
training residents, and the costs associated with
lower-income Medicare patients—specifically,
the share of Medicare patients receiving Supple-
mental Security Income.15,16 We also adjusted for
interest expense; this is necessary so that hospi-
tals do not appear more efficient just because
they finance their operations with equity rather
than debt.
The result of these standardization processes
is a measure of hospital costs that is comparable
across hospitals.17
Creating Levels Of Financial Pressure The

EXHIBIT 2

Testing The Relationship Between Hospitals’ Revenues And Costs

Empirical question
Do costs vary with a hospital’s
financial resources?
Do hospitals with the largest
Medicare losses tend to be
hospitals under the most
financial strain?
Our hypothesis
Yes. Costs per discharge are positively
related to financial resources.
No. Large Medicare losses often stem
from having financial resources to
cover losses. Therefore, most
hospitals with large Medicare losses
should have total margins (all payers)
at least equal to national averages.
Alternative hypothesis
No. Costs are not related to financial
resources.
Yes. Medicare losses put great strain
on hospitals, and they can only stay
afloat by shifting costs onto private
payers. Hospitals with large
Medicare losses will have poor total
(all-payer) margins.

SOURCE Authors’ illustration of testable hypotheses.

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key causal variable in our analysis is deciding
whether a hospital is under weak or strong pres-
sure to constrain costs. To determine whether
financial pressure leads to lower costs, we
grouped hospitals into high, low, and medium
levels of financial pressure. We then tested
whether hospitals under high levels of financial
pressure during 2002–2006 ended up with lower
standardized inpatient costs per discharge in
2007. We defined high, low, and medium-pressure
hospitals as follows:
(1) Hospitals under high pressure need to con-
strain their costs and generate profits on Medi-
care patients because their median profit
margins from non-Medicare sources were less
than 1 percent and their net worth did not grow
during the past five years.18 In these hospitals,
the lack of non-Medicare profits pressures the
hospitals to constrain costs and generate Medi-
care profits.
(2) Hospitals under low pressure are those
that had median profit margins from non-Medi-
care sources that exceeded 5 percent from 2002
to 2006. The low-pressure category is also re-
stricted to hospitals that would have been able
to grow their net worth by more than 1 percent
per year, even if they failed to generate Medicare
profits.18 As a result of high profits from other
sources, these hospitals can absorb any losses
they might incur on Medicare patients stemming
from their high costs per discharge.
(3) Hospitals under medium pressure are all
remaining hospitals. These are often hospitals
with moderate non-Medicare profits margins in
the 1–5 percent range.
Applying Our Methods To Cases From The
Popular Press To corroborate our broader na-
tional findings—that the financial resources of
hospitals affect their costs—we examined indi-
vidual hospitals in two cities.We chose two cities
that local newspapers highlighted as having hos-
pitals with a wide disparity in payer mix and
market power, Chicago and Boston.5,6,19 In addi-
tion, in one of the markets (Boston), the state
attorney general’s office has conducted an inves-
tigation and shows in its preliminary report that
prices vary widely and are associated with hos-
pital systems’ market power.7
Cost and profit data for these hospitals were
obtained from the hospitals’ Medicare Cost Re-
ports. Data on the hospitals’ investment port-
folios were obtained from the 2005 Internal
Revenue Service Form 990 submissions of the
hospitals and their affiliated foundations. We
then compared the characteristics of hospitals
that the two newspapers classified as possessing
strong market power and a profitable payer mix
to those that the newspapers classified as lacking
market power and having a relatively poor payer
4 H E ALTH A FFAI RS M AY 2 0 1 0 2 9 :5
Dominant hospitals
can have above-
average cost
structures and still
remain highly
profitable.
mix.We confirmed the payer-mix information by
examining Medicare Cost Reports.
Results
With respect to hypothesis one, we find that fi-
nancial resources affect costs. We see that the
median hospital that was under financial pres-
sure to constrain costs had standardized inpa-
tient costs per discharge equal to 93 percent of
the national average (Exhibit 3). In contrast,
hospitals with strong financial resources had
median costs equal to 104 percent of the national
average.
With respect to hypothesis two, we find that
the median hospital with large Medicare losses
actually has above-average aggregate profit-
ability on business from all types of payers
(Exhibit 4). In other words, Medicare losses tend
to occur at hospitals with resources to cover
those losses.
It may appear odd that hospitals with high
costs have high total profit margins. In a typical
industry, high unit costs are not associated with
high profits. For example, if Toyota has lower
cost structure than General Motors, Toyota is
expected to be more profitable. The hospital in-
dustry is different in several ways. Hospital mar-
kets are local; some hospitals have dominant
market positions; prices vary widely by payer;
and nonprofit providers dominate the market.
Given the unique nature of hospital markets,
dominant hospitals can have above-average cost
structures and still remain highly profitable.
We are not saying that no hospitals are strug-
gling. As we show, some are under financial
pressure, with 0 percent total margins, despite
profits on Medicare patients (Exhibit 3).
Although these hospitals do struggle financially,
the primary reason for the struggle is rarely
Medicare losses. These hospitals may lack a size-
able number of privately insured patients, and
the market power to obtain the same rates for
 EXHIBIT 3

Effects Of Financial Pressure On Hospitals’ Cost Constraint

Category of hospital based on level of financial pressure, 2002–2006
High financial pressure (non-Medicare Medium Low financial pressure (non-Medicare
Hospital characteristics margin <1%) resources margin >5%)
Number of hospitals 837 413 1,700
Share of hospitals 28% 14% 58%
FINANCIAL CHARACTERISTICS (2007 MEDIANS)

Non-Medicare margin (private, Medicaid, uninsured, −2%a 5% 14%

investment income)
Standardized cost per discharge as a share of the 93% 98% 104%
national median
Medicare margin 4%a −4% −12%
Total (all-payer) margin 0% 2% 7%
PATIENT CHARACTERISTICS (2007 MEDIANS)

Discharges per hospital 5,424a 7,478 7,112

Medicare fee-for-service share of inpatient days 45% 44% 46%
Medicaid share of inpatient days 13%a 12% 10%

SOURCE Authors’ analysis of Medicare Cost Reports and claims files, Centers for Medicare and Medicaid Services. NOTES Standardized costs are adjusted for case-mix,
wage index, outliers, transfer cases, interest expense, and the effect of teaching and low-income Medicare patients on costs per discharge. High financial pressure
indicates that non-Medicare margins were less than 1 percent from 2002 to 2006 and the hospital was dependent on Medicare profits to grow net worth.
Hospitals with low financial pressure had median margins above 5 percent from 2002 to 2006, and their net worth would have grown by more than 1 percent per
year even if Medicare profits were zero. aSignificantly different from hospitals with a relatively strong level of resources, using p ¼ 0:01 and a Wilcoxon rank test.
A Wilcoxon rank test is used to limit the influence of the few hospitals that report very low or very high costs per discharge.

these patients, that dominant providers in the
market obtain.
Results Of Case Studies
When we examined the costs of hospitals high-
lighted in two newspaper accounts, we found
that the two hospitals identified as having the
strongest market position tended to have high
costs relative to national averages—114 percent
and 110 percent of the national median, re-
spectively—and losses on Medicare patients
(Exhibit 5). But despite these Medicare losses,
these high-cost hospitals had high levels of over-
all profitability and high levels of financial re-
serves (marketable securities) relative to their
overall annual operating costs.
In contrast, the hospitals under financial
stress tended to have lower costs—102 percent,
88 percent, and 89 percent of the national
median, respectively—as well as higher Medicare
profits and relatively low financial reserves. Part
of the higher Medicare profits at financially
stressed hospitals may be due to Medicare pay-

EXHIBIT 4

Financial Stability Of Hospitals With Large Medicare Losses, 2007

Overall Medicare profit margin in 2007
Financial characteristics (medians) Less than −10% −10% to 0% More than 0%
Number of hospitals 1,138 789 964
Total (all-payer) margin, 2004–2006a 5% 4% 3%
Percent change in net worth, 2004–2006 17% 15% 14%
Medicare cost per discharge (2007) as
percent of national median 112% 99% 89%
Medicare margin (2007) −20% −5% 8%

SOURCE Authors’ analysis of Medicare Cost Reports, Centers for Medicare and Medicaid Services. NOTES Standardized costs are
adjusted for case-mix, wage index, outliers, transfer cases, interest expense, and the effect of teaching and low-income Medicare
patients on costs per discharge. Relative costs per case are the median standardized cost per discharge for the group divided by
the national median standardized cost. Total margin refers to total revenue from all sources (including Medicare) less total
expenses, divided by total revenue. aWhen comparing the highest-cost to the lowest-cost groups, the difference in median total
margins from 2004 to 2006 is statistically significant (p ¼ 0:0003) using a Wilcoxon rank test. The difference in equity growth
rates is not statistically significant (p ¼ 0:088).

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EXHIBIT 5

Case Studies Of Hospitals’ Market Power, Wealth, And Medicare Margins

Total
Total Financial reserves Standardized Medicare Overall (all-
revenue, (securities), inpatient costs per Medicare payer)
$ millions $ millions discharge/national margin margin
Hospital and city Hospital class (2007) (2005) median (2007) (2007) (2007)
FIRST CASE STUDY: CHICAGO HOSPITALS
Hospital A Strong market power, strong 1,240 1,430 114% −23% 12%
payer mix
Hospital B Poor payer mix, lack of 300 15 102 15 2
market power
Hospital C Poor payer mix, lack of 130 1 88 15 3
market power
SECOND CASE STUDY: BOSTON HOSPITALS

Hospital A Strong market power 2,580 2,447 110% −20% 13%

Hospital B Lack of market power 560 145 89 10 2

SOURCE Authors’ analysis of Medicare Cost Reports, Centers for Medicare and Medicaid Services; and Internal Revenue Service Form 990s from the five case-study
hospitals. NOTES Financial reserves include all securities investments and combine the assets of the hospital and its nonprofit foundations. Relative costs are the
standardized cost per discharge for the hospital divided by the national median standardized cost. Standardized costs are adjusted for case-mix, wage index,
outliers, transfer cases, interest expense, and the effect of teaching and low-income Medicare patients on costs per discharge. Overall Medicare margin is
allowable Medicare revenues minus costs all divided by Medicare revenues.

ments that are made to hospitals with a dispro-
portionate share of Medicaid patients. But a key
reason for the difference in Medicare profits is
the hospitals’ difference in costs per case.
Consistent with our hypothesis that financial
resources can drive costs, the case studies indi-
cate that hospitals with the strongest market
positions tend to have the highest cost structures
and relatively low Medicare margins.
Conclusions
There is general agreement that high private-
payer margins are correlated with low Medicare
margins. The debate is about which direction the
causation flows. In this paper we have argued
that hospitals exercise a degree of control over
their costs. We find that relatively abundant
financial resources can drive spending up and
that limited financial resources can constrain
spending.
Given the difficulty that employers have in
paying rising health care costs—and the diffi-
culty the Medicare Trust Funds will have in
remaining solvent, given current spending
trends—payers will need to set rates so that hos-
pitals feel financial pressure to constrain costs.
To maintain quality while constraining costs,
there should be financial rewards and financial
penalties tied to the quality of care.
For example, hospitals with strong outcome
measures such as low risk-adjusted mortality
scores could receive bonus payments, and pro-
viders such as those with the highest risk-
adjusted readmission rates could receive penal-
ties. Financial pressure and financial rewards
could be used in tandem to promote a more effi-
cient health care system. ▪

The views expressed here are those of

the authors and do not necessarily
reflect those of the Medicare Payment
Advisory Commission. [Published online
18 March 2010.]

6 HE A LT H A FFA IRS M AY 2 0 10 2 9 :5
NOTES
1 American Hospital Association.
American Hospital Association 2007
annual survey of hospitals. Chicago
(IL): AHA; 2007.
2 The data presented by the American
Hospital Association on private-
payer payment-to-cost ratios are
based on the hospitals’ internal cost-
accounting systems and do not re-
flect allowable costs in Medicare
cost-accounting principles. In addi-
tion, the data represent averages and
do not reflect the wide variation in
private-payer rates. Two publications
illustrate that payment rates to
individual hospitals can vary widely,
even when those hospitals are in the
same market and being paid by the
same insurer. See Notes 3 and 4
below.
3 Reinhardt UE. The pricing of se-
crecy. Health Aff (Millwood).
2006:25(1):57–69.
4 New Jersey Commission on Ration-
alizing Healthcare Resources. New
Jersey Commission on Rationalizing
Healthcare Resources: final report.
Trenton (NJ): Commission on
Rationalizing Healthcare Resources;
2008 Jan 24 [cited 2010 Mar 8].
Available from: http://www.nj.gov/
health/rhc/finalreport/documents/
entire_finalreport.pdf
5 Colias M. The hospital gap. Crain’s
Chicago Business. 2007 Mar 26.
6 Allen S, Bombardieri M, Rezendes
M, Farragher T, Kowalczyk L,
Krasner J. A healthcare system badly
out of balance. Boston Globe. 2008
Nov 16.
7 Massachusetts Office of the Attorney
General. Investigation of health care
cost trends and cost drivers, pre-
liminary report. Boston (MA): Office
of the Attorney General; 2010
Jan 29.
8 Morrisey MA. Cost shifting: new
myths, old confusion, and enduring
reality. Health Aff (Millwood).
2003;22:w489–91.
9 Congressional Budget Office. Key
issues in analyzing major health in-
surance proposals [Internet]. Wash-
ington (DC): CBO; 2008 [cited 2010
Mar 8]. Available from: http://
www.cbo.gov/ftpdocs/99xx/
doc9924/12-18-KeyIssues.pdf
10 Dranove D, White WD. Medicaid-
dependent hospitals and their pa-
tients: how have they fared? Health
Serv Res. 1998;33(2):165–85.
11 Zwanziger J, Bamezai A. Evidence of
cost shifting in California hospitals.
Health Aff (Millwood). 2006;25(1):
197–203.
12 Dobson A, DaVanzo J, Sen N. The
cost-shift payment hydraulic: foun-
dation, history, and implications.
Health Aff (Millwood). 2006;25
(1):22–23.
13 Fox W, Pickering J (Milliman,
Seattle, WA). Hospital and physician
cost shift: payment level compensa-
tion of Medicare, Medicaid, and
commercial payers. Chicago (IL):
American Hospital Association;
2008 Dec.
14 Kessler D (School of Business and
Hoover Institution, Stanford Uni-
versity, Palo Alto, CA). Cost shifting
in California hospitals: what is the
effect on private payers? Palo Alto
(CA): California Foundation for
Commerce and Education; 2007
Jun 6.
15 Regression analysis indicated that
hospitals with high shares of poor
patients (those on Supplemental
Security Income, or SSI) tend to have
slightly higher costs than other
hospitals, and hospitals that engage
in teaching residents tend to have
higher costs. When standardizing
costs, we removed the empirically
estimated effect of SSI patients and
teaching residents on costs per case
using the coefficients from the re-
gression analysis.
16 Medicare Payment Advisory Com-
mission. Report to the Congress:
Medicare payment policy. Washing-
ton (DC): MedPAC. 2007 Mar. p. 65.
17 As expected, after standardization,
the cost per discharge is no longer
strongly correlated with the location
or teaching status of the hospital.
18 High-pressure hospitals have low
profits from non-Medicare sources.
Non-Medicare profits are considered
low if median profit margins from
these non-Medicare sources were
less than 1 percent from 2002 to
2006 [that is, (net income − Medi-
care profits/total revenue − Medicare
revenue) <1 percent]. Non-Medicare
margins reflect the sum of net profit
(or loss) on private-payer, Medicaid,
self-pay, and charity cases, as well as
non–patient care revenues and costs.
Because some charitable donations
of buildings and some transfers of
assets are not included in nonprofit
hospitals’ income, we also examine
changes in net worth. Net worth is
defined as assets minus liabilities
and is referred to as “net assets” by
nonprofit hospitals and equity by
for-profit entities. High-pressure
hospitals are limited to those that
would have grown their net worth by
less than 1 percent per year if
Medicare profits had been zero [that
is, (net worth in 2006 − Medicare
profits from 2002 to 2006) < net
worth at the end of 2001 × 1.05].
Looking at net worth in addition to
income allows us to avoid classifying
hospitals that have large transfers
from their foundations or donations
of buildings as being under pressure
and also acts as a check on potential
errors in reporting of income on
hospitals’ cost reports.
19 Allen S, Bombardieri M, Rezendes
M, Farragher T, Kowalczyk L,
Krasner J. A handshake that made
healthcare history. Boston Globe.
2008 Dec 28.
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