Network structure and hospital financial performance in New York State: 1991-1995

As networks have proliferated, questions have arisen regarding which struct ure is optimal. To obtain an answer from the hospital perspective, the auth ors conducted a survey of New York State hospitals to determine how network integration, complexity, and financial risk sharing relate to measures of financial performance during the period of 1991-1995. Of the 64 hospitals i ndicating a network affiliation by 1995, 67.2 percent listed some network r isk-sharing activity The least integrated networks were associated with the smallest improvements in throughput, and the most complex were associated with the largest negative changes in operating margins. During the first 2 years of network membership, hospitals joining risk-sharing networks experi enced operating margin gains averaging 12 percentage points higher than hos pitals joining networks without risk sharing; however, this difference diss ipated in later years. Networks with higher levels of integration, lower le vels of complexity, and which involve some risk-sharing between affiliates are most likely to experience improved hospital financial performance durin g the network's initial years.