More is not always better, Economic consequences of regulated changes in disclosure: The case of executive compensation, Corporate governance and lobbying strategies, Raising rivals' costs through political strategy: An extension of resource-based theory, Corporate PAC campaign contributions in perspective, Does the hospital board need a doctor? Recall our main results in Table 3, which reveal that lobbying increases employee salaries in NFP hospitals rather than in for-profit hospitals. For-profit hospitals have often been accused of cream skimming by selectively admitting only those patients who can be treated at acceptably high price-cost ratios (Eskoz and Peddecord 1985). Hospital lobbying reduces uncompensated care costs in for-profit hospitals. A higher MCI indicates higher market competition, which may involve a higher human resource supply. Therefore, in this study, we can only study the hospitals that spend over $10,000 on lobbying at the federal level. Other than a potential logistical issue of keeping track of multiple incentive payments for one Medicare provider number, it's hard to fathom the reason for penalizing multi-campus health systems. For example, in order to protect their own interests, NFP organizations may lobby policymakers when shifts in government spending affect nonprofit access to government grants or contracts, when changes in tax rates modify incentives for charitable contributions, or when regulations require nonprofits to disclose financial information or refrain from certain types of financial or political activities (Child and Grnbjerg 2007, 259). American Workforce We predict that Leverage is positively correlated with Uncomp. First, in cost management, we only study the effects of hospital lobbying on employee salaries and uncompensated care costs. Does reported policy activity reduce contributions to nonprofit service providers? The beneficiaries of Medicare and Medicaid are less likely to pay their bills in full amounts. 2023 Healthcare IT News is a publication of HIMSS Media. Some studies also use the market concentration index as a control variable for market competition (e.g., Goes and Zhan 1995; Alexander, Weiner, and Griffith 2006; Collum et al. Other special hospitals include obstetrics and gynecology; eye, ear, nose, and throat; long term acute-care; rehabilitation; orthopedic; and other individually described specialty services. As we discussed previously, however, uncompensated care costs are one part of hospital costs. Charity care is never expected to be reimbursed, and it is different from bad debts that hospitals incur when they bill patients but do not receive payment (AHA 2010). Lobbying is an important avenue for business organizations to influence legislation, regulations, or policies in order to gain competitive advantage. Second, although we find that the lobbying effects diminish in the second year after lobbying and disappear in the third year, the underlying factors behind this trend remain unclear. Business organizations use lobbying as a vehicle to promote and protect their interests. In Texas, for example, the rate is 70.3%. The American Hospital Association conducts an annual survey of hospitals in the United States. The data below, from the 2020 AHA Annual Survey, are a sample of what you will find in AHA Hospital Statistics, 2022 edition. According to the Center for Responsive Politics (2020), total annual lobbying spending has continually surpassed $3 billion since 2008. A special interest's lobbying activity may go up or down over time, depending on how much attention the federal government is giving their issues. Although hospitals are active participants in lobbying activities, relevant studies about the effects of lobbying in the hospital industry are sparse, largely because of the unavailability of hospital data. Therefore, we expect that lobbying activities have different outcomes among the three types of ownership in the hospital industry. We follow prior studies to select the control variables. We thank two anonymous reviewers and the editor for their comments that significantly strengthened the paper. Open Secrets following the money in politics, OpenSecrets Following the money in politics. Hospitals Infographics to provide visualizations for this data. Hospital lobbying increases employee salaries in government hospitals. The extant research only focuses on one type of organization ownership to study the effects of lobbying. Particularly active clients often retain multiple lobbying firms, each with a team of lobbyists, to press their case for them. The results suggest that hospital lobbying lowers uncompensated care costs in NFP and for-profit hospitals, supporting our H2a and H2c. All rights reserved. A crucial stream of research on lobbying studies the direct relationship between lobbying activities and financial performance as measured by accounting-based and market-based outcomes. A specially staffed, specialty equipped, separate section of a hospital dedicated to the observation, care, and treatment of patients with life-threatening illnesses, injuries, or complications from which recovery is possible. The report was filed on Oct. 2, Please wait. The Importance of Lobbying for Education - Dorn Policy Group, Inc. Uncompensated care, including charity care and bad debts, is an overall measure of hospital care provided for which no payment is received from patients or insurers (Davidoff et al. 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There are two ways lobbying hospitals could benefit more from policy changes than their nonlobbying peers. First, lobbying hospitals maintain a close relationship with legislators so that they can earlier obtain and better understand important information regarding regulatory agendas, policy changes, and other factors than nonlobbying hospitals. 2006) and government contracts (Hansen and Mitchell 2000). OHA exists to collaborate with member hospitals and health systems to ensure a healthy Ohio. Long term care hospitals may be defined by different methods; here they include other hospitals with an average length of stay of 30 or more days. Hospitals can sell bad debts to collection agencies for partial payment but need to absorb charity care costs by themselves. Lagged Effects of Hospital Lobbying on Performance. Thus, reverse causality does not drive the association between hospital lobbying expenses and uncompensated care costs. In fact, no other sector of the U.S. economy spends more on lobbying than the healthcare sector does, according to OpenSecrets. In 2020, the healthcare sector spent more than $623 million on lobbying, and from January through June 2021, it spent upward of $331 million on lobbying. 2013). Regression Analysis of Changes in Hospital Uncompensated Care Costs on Changes in Lobbying Expenses. 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After reviewing previously cited estimates, we examine and independently validate supply expense data (collected by the American Hospital Association) for over The coefficient on Lobby_exp is 0.0570, suggesting that each additional $1 spent on lobbying results in a $1.26 (i.e., $431 0.057/19.5) salary increase in an NFP hospital. When Lobby_dumt2 and Lobby_expt2 are the variables of interest, the results are consistent with those in Tables 35, except that the magnitude and significance are smaller than those in our main analyses. Yangmei Wang, Yuewu Li, Jiao Li; Hospital Lobbying and Performance. Hospitals and related healthcare institutions rank the 8th highest in lobbying with expenditures of over $1.79 billion over the past 22 years (Frankenfield 2020), but empirical research on lobbying in the hospital industry is relatively sparse, partially due to hospital data limitations.1 Like other lobbying organizations, hospitals or hospital groups that engage in lobbying usually maintain a close relationship with lawmakers, so they often take advantage of that relationship and alter their business strategies earlier to better prepare for the changing environment (Marmor et al. Hospitals 2023 Infographics PDF, Fast Facts on U.S. To examine the lagged effects of hospital lobbying on performance, we create Lobbyt2, and Lobbyt3 as the independent variables; i.e., Lobby_dumt2 and Lobby_dumt3 are indicator variables that are set equal to 1 if a hospital has lobbying expenses in year t2 and year t3, respectively, and 0 otherwise. The higher the MCI, the more competitive the hospital market. Severely burned patients are those with any of the following: (1) second-degree burns of more than 25% total body surface area for adults or 20% total body surface area for children: (2) third-degree burns of more than 10% total body surface area; (3) any severe burns of the hands, face, eyes, ears, or feet; or (4) all inhalation injuries, electrical burns, complicated burn injuries involving fractures and other major traumas, and all other poor risk factors. Nine states had uncompensated care pools. Consistent with our expectations, we find that (1) lobbying is positively related to employee salaries in NFP hospitals, (2) lobbying is positively related to uncompensated care costs in NFP and for-profit hospitals, (3) lobbying is positively related to ROA in for-profit hospitals, and (4) lobbying has no significant effect on employee salaries, uncompensated care costs, and ROA in government hospitals.
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