Financial characteristics of hospitals purchased by investor-owned chains

Abstract

This article focuses on the preacquisition financial condition of not-for-profit hospitals acquired by investor-owned hospital chains. Financial ratios are used to determine if not-for-profit hospitals acquired by investor-owned hospital systems have common financial characteristics which make them a likely target for a takeover. The results indicate that during the time period studied, investor-owned hospital systems did tend to purchase hospitals with common financial characteristics and that these characteristics provide a reasonable description of a financially distressed hospital. This finding has important consequences for our health care delivery system.