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Health Serv Res. 1988 August; 23(3): 343–357.
PMCID: PMC1065509

Hospital profitability and capital structure: a comparative analysis.


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.

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Selected References

These references are in PubMed. This may not be the complete list of references from this article.
  • Herzlinger RE, Krasker WS. Who profits from nonprofits? Harv Bus Rev. 1987 Jan-Feb;65(1):93–106. [PubMed]
  • Renn SC, Schramm CJ, Watt JM, Derzon RA. The effects of ownership and system affiliation on the economic performance of hospitals. Inquiry. 1985 Fall;22(3):219–236. [PubMed]

Articles from Health Services Research are provided here courtesy of Health Research & Educational Trust