The study, headed by Eric Nauenberg, assistant professor of social and preventive medicine and a specialist in health economics, appears in the current issue of the quarterly Medical Care Research and Review. Financial risk-sharing proved to be an essential component for improving hospital financial performance in that it tightens the incentive to move forward and work together. Nauenberg and colleagues hypothesized that hospitals in highly integrated, highly complex networks that included risk-sharing would be the best performers.
Integration refers to how loosely or tightly the member organizations are controlled.
Complexity refers to the number of activities, such as lobbying, financial services, marketing, credentialing, recruitment and education, that are performed by more than one network member. In such networks, financially strong members would provide funds for financially troubled members. To test their hypotheses, the researchers surveyed 64 New York State hospitals involved in networks and analyzed each hospital's financial performance, based on information from 1991-95. Hospitals in moderately integrated, minimally complex networks turned out to be the best performers, with risk-sharing an essential component for success. This study provides information about which network structures are best in terms of lowering the growth of costs and improving financial performance.