A Profitability Evaluation of America's Best Hospitals, 2000–2008

Each year U.S. News and World Report evaluates more than 5,000 U.S. hospitals, of which approximately 3% are considered the best hospitals in America, and hospital profitability has emerged as a business objective for these hospitals. This study investigates the profitability performance of the best (highest quality) hospitals in the United States. A 9‐year longitudinal investigation of profitability for the best hospitals in the United States is conducted. The results offer evidence that the primary drivers of hospital profitability are the case mix index and daily bed capacity. In terms of hospital profitability, there appears to be a tradeoff between these two factors. Finally, caution must be used when ranking U.S. News and World Report Honor Roll hospitals, in terms of profitability and performance.