All ETDs from UAB

Advisory Committee Chair

Robert Weech-Maldonado

Advisory Committee Members

Larry Hearld

Nir Menachemi

Michael Morrisey

Stephen O'Connor

Document Type


Date of Award


Degree Name by School

Doctor of Philosophy (PhD) School of Health Professions


ABSTRACT The purpose of this study was to explore the antecedents and consequences of public hospital privatization with special attention to financial distress and financial performance. A national sample of public hospitals using secondary longitudinal data from 1997 to 2009 was used in this study. Data set from the American Hospital Association, the Area Resource File, the Medicare Cost Report and the Local Area Unemployment Statistics were merged to test the hypotheses pertaining to each research question. Based on the resource dependence theory, both environmental variables and organizational variables were included in the analyses. This study adopted the Altman Z-score method to assess public hospital financial distress. Fixed-effects logistic regression, random-effects logistic regression with state fixed-effects, and fixed-effects linear regression were used in this study. Key findings indicated that environmental variable HMO penetration was positively associated with the odds of public hospital financial distress. Organizational variables hospital size, participation in a health network, and outpatient mix were significantly and negatively associated with the odds of experiencing financial distress. Membership of a multihospital system was significantly and positively associated with the odds of experiencing financial distress. Additional findings suggested financial distress increased the odds of privatization and privatization improved financial performance in terms of operating margin and total margin. In addition, findings suggested privatization to public for-profit status resulted in better financial performance compared to privatization to public-not-for-profit status. Keywords: public hospital, privatization, financial distress, financial performance, resources



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