Factors influencing rural hospital affiliation with multihospital systems.

Abstract

The objective of this study was to determine the combination of environmental and financial performance factors that lead to rural hospital association with multihospital systems. This study is based on data obtained from the Michigan-Johns Hopkins Rural Hospital Survey (MJHRHS), a telephone survey of 797 chief administrators of short-term length-of-stay community rural hospitals combined with secondary data sources from the American Hospital Association, the national Area Resource Files, and HCFA's PPS Medicare Cost Report files. The years 1983 and 1988 were target years of the MJHRHS. Cox's proportional hazard model was used to identify the characteristics of rural hospitals that underwent multihospital system affiliation between 1983 and 1988. Logistic regression was used to compare the characteristics of rural hospitals affiliating with systems under contract managed arrangements and owned/leased/sponsored arrangements. The interaction of financial performance and environmental factors was a critical factor in explaining rural hospital/multihospital system affiliation. Rural hospitals joining non-profit systems possessed poor financial performance and were located in unfavorable environments. Rural hospitals joining for-profit systems also possessed poor financial performance but were located in relatively favorable environments. Mission compatibility was a significant factor for membership with for-profit systems, but not for membership with non-profit systems. Finally, of the rural hospitals that underwent affiliation between 1983-1988, those with poorer financial performance were more likely to affiliate under an owned/leased/sponsored arrangement than a contract managed arrangement. Poorly performing rural hospitals were more likely to undergo system affiliation; further studies should evaluate whether or not the performance of these rural hospitals has improved after affiliation. Also, results indicate important differences between non-profit and for-profit system membership.