Managed care payment and administrative costs in Florida hospitals

This study addresses the question of whether managed care increases administrative burden by examining the association between the extent of managed care payment and administrative costs in hospitals. The data set includes acute-care urban hospitals in Florida with at least 100 beds over the period 2000-2004. The results indicated that on average hospitals with a low level of managed care payment had significantly higher administrative costs per adjusted admission and as a percentage of total operating costs, although the results differed somewhat when broken out by type of managed care. The results do not support the argument that managed care results in increased administrative burden for hospitals. Although there were some differences depending on the type of managed care, in no case was more managed care payment associated with higher administrative costs.