Hospital profitability and capital structure: a comparative analysis.

Published

Journal Article

This article compares the financial performance of hospitals by ownership type and of five publicly traded hospital companies with other industries, using such indicators as profit margins, return on equity (ROE) and total capitalization, and debt-to-equity ratios. We also examine stock returns to investors for the five hospital companies versus other industries, as well as the relative roles of debt and equity in new financing. Investor-owned hospitals had substantially greater margins and ROE than did other hospital types. In 1982, investor-owned chain hospitals had a ROE of 26 percent, 18 points above the average for all hospitals. Stock returns on the five selected hospital companies were more than twice as large as returns on other industries between 1972 and 1983. However, after 1983, returns for these companies fell dramatically in absolute terms and relative to other industries. We also found investor-owned hospitals to be much more highly levered than their government and voluntary counterparts, and more highly levered than other industries as well.

Full Text

Duke Authors

Cited Authors

  • Valvona, J; Sloan, FA

Published Date

  • August 1988

Published In

Volume / Issue

  • 23 / 3

Start / End Page

  • 343 - 357

PubMed ID

  • 3403274

Pubmed Central ID

  • 3403274

Electronic International Standard Serial Number (EISSN)

  • 1475-6773

International Standard Serial Number (ISSN)

  • 0017-9124

Language

  • eng