Collection performance: an empirical analysis of not-for-profit community hospitals

Many not-for-profit community hospitals had major shifts in their annual collection performance between 1986 and 1988. The collection performance is measured by excess collection time; this is computed as the difference between the actual average collection time for a hospital and the median for one of the six panels to which the hospital is assigned based on ownership, control code, and financial reporting practices. The sample for this study has 1,246 not-for-profit hospitals comprising over 50 percent of total revenue and expenses of all community hospitals (about 5,500). More than 16 percent of these hospitals had annual changes of ten-plus days in each of the years. Excess collection time within the six panels was examined by state, payer mix (Medicare, Medicaid, and Blue Cross), membership in the Council of Teaching Hospitals, medical school affiliation, case-mix index for Medicare, contractual allowance rate, debt-service coverage, return on assets, new investments, age of property, and urban location. Major findings were that collection patterns are different among some states. The proportions of Medicare, Medicaid, and Blue Cross are negatively associated with excess collection time in three of the panels. Contractual allowance is positively related, and return on assets is negatively associated with excess collection time in two of the panels. The other factors had virtually no effect on the collection performance.