Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. 5. Evaluating Current Distribution of DSH Using General Measures of Financial Pressure and Vulnerability


In this chapter, we discuss general measures of financial viability that could be used to evaluate how well the DSH allocation policy targets financially vulnerable safety net hospitals. The measures that we evaluated are:

  • FY 1998 total margin net of DSH payments;
  • Three-year average total margin net of DSH payments (FY1997-1999);
  • A three-year composite index of four financial indicators: total margin net of DSH payments, current ratio, cash flow to current debt, and asset turnover.

Measures related to the direct effect of serving low-income populations on a hospital's financial condition are addressed separately in Chapter 8. These measures include uncompensated care and revenue shortfalls from Medicaid and indigent care programs.

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