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International Journal of Health Economics and Management

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01-12-2018 | Research Article

Global budgets in Maryland: early evidence on revenues, expenses, and margins in regulated and unregulated services

Authors: Margit Malmmose, Karoline Mortensen, Claus Holm

Published in: International Journal of Health Economics and Management | Issue 4/2018

Abstract

Maryland implemented one of the most aggressive payment innovations the nation has seen in several decades when it introduced global budgets in all its acute care hospitals in 2014. Prior to this, a pilot program, total patient revenue (TPR), was established for 8 rural hospitals in 2010. Using financial hospital report data from the Health Services Cost Review Commission from 2007 to 2013, we examined the hospitals’ financial results including revenue, costs, and profit/loss margins to explore the impact of the adoption of the TPR pilot global budget program relative to the remaining hospitals in the state. We analyze financial results for both regulated (included in the global budget and subject to rate-setting) and unregulated services in order to capture a holistic image of the hospitals’ actual revenue, cost and margin structures. Common size and difference-in-differences analyses of the data suggest that regulated profit ratios for treatment hospitals increased (from 5% in 2007 to 8% in 2013) and regulated expense-to-gross patient revenue ratios decreased (75% in 2007 and 68% in 2013) relative to the controls. Simultaneously, the profit margins for treatment hospitals’ unregulated services decreased (− 12% in 2007 and − 17% in 2013), which reduced the overall margin significantly. This analysis therefore indicates cost shifting and less profit gain from the program than identified by solely focusing on the regulated margins.

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The descriptive revenues are shown from 2007 to 2013 rather than from 2006 in order to have a mid term reference point of 2010. Revenues from 2006 and other data are available from the authors.

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Title: Global budgets in Maryland: early evidence on revenues, expenses, and margins in regulated and unregulated services
Authors: Margit Malmmose
Karoline Mortensen
Claus Holm
Publication date: 01-12-2018
Publisher: Springer US
Published in: International Journal of Health Economics and Management / Issue 4/2018
Print ISSN: 2199-9023
Electronic ISSN: 2199-9031
DOI: https://doi.org/10.1007/s10754-018-9239-y

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Global budgets in Maryland: early evidence on revenues, expenses, and margins in regulated and unregulated services

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