A follow up study on hospitals profitabilty PRe the BBA

In 2001, Younis, et al., examined the economic and financial performance for the years 1991, 1995 of a sample of hospitals around the United States of America. To reduce the confounding factors from the effect of the Balanced Budget Act of 1997 (BBA), the researchers used 1998 as the most recent year in of analysis. The BBA was implemented on October 1998, however data for this study were drawn from 1996 and the Medicare cost report of September 30, 1998. Researchers used the same dependent variable previously employed by Younis et al. (which year?). However, the researchers added some significant variables that influence the economic and financial performance of hospitals, such as classification as a Critical Access Hospital (CAH), conversion from public to private status or a change in ownership. The set of repressors used is broad and the potential presence of nonlinearities is allowed in this empirical design. Using a comprehensive sample of hospitals from all four US regions, the researchers identify geographic location, extent of competition, size, and occupancy rate as the main determinants of hospital profitability. The effect of size and occupancy rate on hospital profitability is piecewise linear.