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Article
Publication date: 1 March 2011

Li-Lin (Sunny) Liu, Kathryn J. Jervis, Mustafa (Mike) Z. Younis and Dana A. Forgione

The purpose of this study is to examine the association of managerial incentives and political costs with hospital financial distress, recovery or closure. The Medicare…

Abstract

The purpose of this study is to examine the association of managerial incentives and political costs with hospital financial distress, recovery or closure. The Medicare Payment Advisory Commission has stated that hospital closures are important for evaluating the distribution of cost, quality and access to healthcare throughout the US. Using Logistic regression, we demonstrate that hospital closure is associated with low occupancy, return on investment, asset turnover, and lack of affiliation with a multihospital system. It is also significantly associated with urban location, teaching programs, high Medicare and Medicaid patient populations, and high debt. Essential access nonprofit hospitals are less likely to close, while this does not affect governmental and for-profit hospitals. Our research hypotheses are supported by these results.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 23 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2014

Kelly Noe and Dana A. Forgione

We examine the association of for-profit (FP) and nonprofit (NP) economic incentives in hospice care providers with financial and nonfinancial metrics of management…

Abstract

We examine the association of for-profit (FP) and nonprofit (NP) economic incentives in hospice care providers with financial and nonfinancial metrics of management performance. Controlling for quality of patient care and differences in cost-efficiency, we find that FP providers (1) selectively admit patients with longer life-prognoses and billable days and hence lower average costs per day, (2) employ a lower average cost/skill mix of workers, and (3) have higher CEO compensation and profit. The NP providers admit more patients with the less profitable life-prognoses attributes, have lower CEO compensation, and reinvest their net earnings under the non-distribution constraint. While the profit incentive may be needed to attract providers into this rapidly growing and underserved market, the NP providers return a lower cost per patient served from the taxpayer's perspective.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 26 no. 2
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2009

Thomas E. Vermeer, K. Raghunandan and Dana A. Forgione

Problems with governance at non-profit (NP) healthcare organizations have recently led to legislative scrutiny of their audit committee practices. Using data from a survey…

Abstract

Problems with governance at non-profit (NP) healthcare organizations have recently led to legislative scrutiny of their audit committee practices. Using data from a survey of chief financial officers of NP healthcare organizations and from the GuideStar database, we examine audit committee interactions with external auditors for a sample of 69 NP healthcare organizations. We find that 71% of the audit committees in our sample meet privately with the external auditor and the mean number of such meetings 1.9. Our results also suggest that audit committee interaction with the external auditor varies in response to resource dependencies, existence of debt, audit quality, audit tenure, and organizational size. These findings suggest that NP healthcare organizations respond to monitoring demands by adopting suitable audit committee related interactions.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 21 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2013

Thomas E. Vermeer, K. Raghunandan and Dana A. Forgione

Non-profit organizations constitute an important share of the U.S. economy, and recent audit failures and GAO findings highlight the importance of auditor reporting…

Abstract

Non-profit organizations constitute an important share of the U.S. economy, and recent audit failures and GAO findings highlight the importance of auditor reporting decisions in this sector. In this study, we examine going-concern modified audit opinions for non-profit organizations. Using audit opinion data for 3,567 non-profits exhibiting some signs of financial stress, we find that non-profits are more likely to receive a goingconcern modified opinion if they are smaller, are in worse financial condition, expend less on program-related activities, and have more internal control related audit findings. Our analysis of the subsequent resolution of the going-concern uncertainties suggest that only 27 percent of the non-profits receiving an initial going-concern modified audit opinion filed for dissolution in the subsequent four fiscal years. Our findings fill a gap in an important area that has received little research attention, and provide a useful benchmark for non-profits and their auditors.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 25 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2012

Xiaoli (Charlie) Yuan, Dennis M. López and Dana A. Forgione

The purpose of this paper is to analyze the market for audit services for publicly traded companies operating in the US for-profit (FP) healthcare sector. Complex national…

Abstract

The purpose of this paper is to analyze the market for audit services for publicly traded companies operating in the US for-profit (FP) healthcare sector. Complex national and local healthcare laws and regulations suggest the importance of assessing fee effects of joint nationallevel and city-specific expertise among auditors. Using cross-sectional OLS regression analysis, we find that joint expertise significantly affects audit pricing in the healthcare sector. We find a fee premium of 33.6 percent on engagements where auditors are both national and city-specific specialists. We also find that Big-4 auditor reputation is significantly priced over and above the effects of joint auditor expertise, and a significant positive association exists between audit and non-audit service fees-indicating the presence of knowledge spillover effects among healthcare company auditors.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 24 no. 4
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2014

Kelly Noe and Dana A. Forgione

This paper examines the association of charitable donations with quality of care proxies for nonprofit hospice providers in the United States (US). An estimated 1.45…

Abstract

This paper examines the association of charitable donations with quality of care proxies for nonprofit hospice providers in the United States (US). An estimated 1.45 million patients received hospice care in the US in 2008. Medicare hospice spending exceeded $10 billion in 2007 and is expected to more than double over the next 10 years. Using Guidestar and Medicare Hospice Cost Report data, we find donations are positively associated with proxies for nurse and social worker quality of care, but not with our home-health aide quality proxy. This research adds to our understanding of charitable contributions in hospice provider organizations.

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Journal of Public Budgeting, Accounting & Financial Management, vol. 26 no. 4
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2017

Kelly Noe, Dana A. Forgione, Pamela C. Smith and Hanni Liu

We examine earnings management in non-publicly listed companies, with a focus on for-profit (FP) hospice organizations, and extend the accounting earnings management…

Abstract

We examine earnings management in non-publicly listed companies, with a focus on for-profit (FP) hospice organizations, and extend the accounting earnings management literature to the hospice industry. FP hospice organizations file Medicare cost reports that include complete financial statements not otherwise publicly available. Managers of FP hospice organizations have incentives to manage earnings to increase performancebased bonuses, meet or beat bond covenant requirements, or avoid public scrutiny. We find total accruals are significantly positively associated with profitability, debt, and size factors. However, discretionary accruals are significantly negatively associated with debt and size, but not profitability. Thus, monitoring and political cost factors appear to effectively mitigate earnings management in this industry sector.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 29 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 5 March 2018

Benedikt Quosigk and Dana A. Forgione

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation…

Abstract

Purpose

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation discretion significantly impacts program ratio reporting, the primary NP performance measure. Stakeholders are misled to allocate limited resources inefficiently. While some NPs file group Internal Revenue Service (IRS) Form 990 returns with their affiliates, effectively providing consolidated statements, others choose to file independently of their affiliates.

Design/methodology/approach

The authors use OLS regression analysis and panel data for 5,697 NP-year observations for the period 2009-2011 retrieved from the National Center for Charitable Statistics Form 990 database.

Findings

The authors find evidence that consolidation discretion substantially impacts donor decisions. NP managers have incentive to utilize consolidation discretion to influence charitable giving.

Practical implications

The authors urge the IRS and the Financial Accounting Standards Board to reconsider the consolidation guidance for NP organizations, to develop performance measures beyond the widely used program ratio, and to require program ratio segment reporting to allow for better comparability among NPs irrespective of consolidation status. Further, the authors caution stakeholders to consider supporting organization transactions in their resource allocation decisions.

Originality/value

The authors are the first to use NP supporting organization information to investigate consolidation discretion and its impact on donor responses.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 30 no. 1
Type: Research Article
ISSN: 1096-3367

Keywords

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Article
Publication date: 1 March 2007

Dana A. Forgione, Melony J. Goodhand and John A. Wrieden

We present a legislative background and assessment of approaches to financing the US Department of Veterans Affairs (VA) healthcare services, and focus on issues related…

Abstract

We present a legislative background and assessment of approaches to financing the US Department of Veterans Affairs (VA) healthcare services, and focus on issues related to beneficiaries eligible for both VA and Medicare benefits. We refer to a large, VA Medical Center (VAMC) hospital and healthcare complex as a case for comparison of financing approaches. Several legislative proposals had been made to grant the VA funding transfers from Medicare. To date, none has passed in the Congress. Our analysis shows that payments from Medicare would need to be adjusted for the specialized characteristics of VAMC patients, as well as for higher capital costs related to the federal VAMC mandate to maintain reserve capacity for national health emergencies, in order to appropriately apply Medicare payments.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 19 no. 3
Type: Research Article
ISSN: 1096-3367

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Abstract

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 25 no. 1
Type: Research Article
ISSN: 1096-3367

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