Hospital Reliance on Inpatient Rehabilitation-Related Specialty Care Revenue

Many hospitals operate on thin financial margins. Minor changes in market conditions, government regulations, or insurance reimbursement often place hospitals in a precarious financial position. One strategy to ensure sustained financial viability is to adapt the mix of services offered to patients. Hospitals offering services for which insurers reimburse more generously garner additional revenue to cover expenses and/or generate profit. Certain types of specialty inpatient services have been alleged to potentially generate greater reimbursement. This study empirically assesses whether general, acute care hospitals respond to external forces by increasing their reliance on revenues derived from specialty care services. Tobit analysis is applied to data drawn from the American Hospital Association Annual Survey of Hospitals to assess whether hospitals with specific market, operating, institutional characteristics, or past financial conditions display a significantly greater proportion of total (gross) revenues derived from inpatient psychiatric and inpatient rehabilitation care services. The results suggest that a hospital's profit/tax status, past financial positions, past operating conditions, and geographic location all significantly impact a hospital's reliance on inpatient psychiatric and rehabilitation services.