The association between operating margin and surgical diversity at Critical Access Hospitals

Abstract

Abstract Context Surgical volume is correlated with increased hospital profitability, yet many Critical Access Hospitals (CAHs) offer few or no inpatient surgical services. Objectives This study aims to investigate the impact of the presence of different inpatient surgical services on CAH profitability. Methods The study design was a cross-sectional analysis of financial data from the most recent fiscal year (FY) of 1299 CAHs. Multiple linear regression was utilized to assess how the operating margin was affected by the number of different inpatient surgical services offered per hospital. Covariates known to be associated with hospital profitability included occupancy rate, case mix index (CMI), system affiliation, ownership status (public, private, or nonprofit), and geographic region. Results The regression model for the CAH operating margin returned an R2 value of 0.18. Each additional inpatient surgical service corresponded to a 1.5% increase in operating margin (p=0.0413). Each 10% increase in occupancy rate and 0.1 increase in CMI corresponded to a 0.9% increase in operating margin (p=0.0032 and p=0.0176, respectively). The number of surgical services offered per CAH showed positive correlations with occupancy rate (r=0.23, p<0.0001) and CMI (r=0.59, p<0.0001). Conclusions A positive correlation exists between operating margin and the diversity of inpatient surgical specialties available at CAHs. Furthermore, providing surgery allows CAHs to accommodate higher occupancy rates and case mixes, both of which are significantly and positively correlated with CAH operating margin.