EXTERNAL ENVIRONMENTAL DIMENSIONS AND FINANCIAL PERFORMANCE OF MAJOR TEACHING HOSPITALS IN THE U.S

Background: Teaching hospitals have a unique mission to not only deliver graduate medical education, but to also provide both inpatient and ambulatory care, and to conduct clinical and medical research; therefore, they are under constant financial pressure, and it is important to find out what types of external environmental components affect their financial performance. No recent studies have been comprehensively conducted for all major teaching hospitals in the U.S. to examine if there is an association between the external environmental dimensions based upon Resource Dependence Theory (Munificence, Uncertainty, Complexity) and the short-term financial performance, measured by days cash on hand all sources, and long-term financial performance, measured by return on assets. Methods: This study analyzed data for 226 major teaching hospitals, spanning 46 states. The dependent variable for short-term financial performance was days cash on hand all sources, which was an average of the most recently available 4-year data (2014-2017). The dependent variable for long-term financial performance was return on assets, which was an average of the most recently available 4-year data (2014-2017). Descriptive statistics were used to assess each variable, including means and standard deviations for normally distributed data, and medians and interquartile range for non-normal data. Differences among independent variables were explored using ANOVA and Chi-square analysis. Linear regression model was used for both aims of the study, using factors with significant univariate results. Results: For the short-term financial performance of major teaching hospitals, results showed significance between outpatient revenue and days cash on hand (p-value 0.039). For the long-term financial performance of major teaching hospitals, the study showed significant relationship between the population of the metropolitan statistical area (p-value 0.041), unemployment rate of the metropolitan statistical area (p-value 0.001) and the teaching hospital’s return on assets. Additionally, system membership (p-value 0.009), type of ownership/control (p-value 0.033), and teaching intensity (p-value 0.047) also showed significant association with return on assets. Conclusions: This study examined if there is an association between the short-term and long-term financial performance of major teaching hospitals in the United States, and the external environmental dimensions, as measured by the Resource Dependence Theory. The results of the study showed significant associations between the long-term financial performance of teaching hospitals and the external environmental dimensions, and additional significant association between system membership, type of ownership/control, and teaching intensity with long-term financial performance