Exploring the Business Case for Magnet Status: Comparison of Medicare Spending per Beneficiary and Average Cost per Discharge Among North Carolina Hospitals based on Geographic Location, Bed Size, Time of Trend Measures, and Healthcare System Association

Abstract

Research Problem and Objectives Rising healthcare costs are a significant concern for individuals, healthcare providers, and our nation. The vitality of North Carolina (NC) hospitals is impacted by the organizations’ human and fiscal resources. Magnet designation is a human resource strategy utilized by some hospitals to recruit and retain their nursing workforce. This study investigated whether Magnet designation among NC hospitals may also support fiscal strategy, contributing to lower Medicare Spending per Beneficiary, and if differences exist in cost per discharge between Magnet-designated hospitals and non-Magnet-designated hospitals. Additional factors considered included hospital location, bed size, time of trend measures, and healthcare system association status. Methods Independent variables included in this quantitative study included Magnet designation, hospital location (rural/urban and NC Medicaid Managed Care Region), bed size, Disproportionate Share Hospital percentage, system status, county tier, and county tier economic rank. Outcome variables were Medicare Spending per Beneficiary (MSPB) and average cost per discharge among North Carolina hospitals. Using secondary data from 2016 to 2021, four quantitative research questions were analyzed using linear mixed model methodology and included 76 NC hospitals. Results Magnet designation does not support lower Medicare Spending per Beneficiary among NC hospitals. The mean MSPB was 0.972 versus 0.941 (p<.001) for Magnet and non-Magnet NC hospitals, respectively, over 2016-2021. Analysis revealed no significant effect of Magnet status on the average cost per discharge (p = 0.221) over the period from 2016 to 2021. However, the average cost per discharge was significantly higher among Magnet hospitals compared to non-Magnet hospitals when 2016-2019 and 2020-2021 were considered independently. Magnet hospitals’ mean average cost per discharge was $10,604 compared to $7,943 (p<.001) for non-Magnet hospitals in 2016-2019. Similarly, Magnet hospitals’ mean average cost per discharge was $15,725 compared to $8,717 (p<.001) for non-Magnet hospitals in 2020-2021. Other independent variables associated with MSPB and average cost per discharge included bed size and system status, with lower MSPB and lower average cost per discharge observed among independent NC hospitals and those with fewer than 100 beds. Additionally, the DSH% among NC hospitals had an effect on MSPB and average cost per discharge, and the association between DSH% differed between Magnet and non-Magnet NC hospitals. Conclusion Magnet designation does not support a fiscal strategy to lower MSPB and cost per discharge among NC hospitals. However, through consideration of additional independent variables, hospital bed size and whether the hospital is independent or affiliated were found to be associated with lower MSPB and lower costs per discharge, offering additional insight into the drivers of healthcare costs. The findings related to DSH% in relation to MSPB and average cost per discharge warrant further study to fully understand this complex interaction. The methodology and findings of this study provide a framework to further evaluate differences in MSPB and average cost per discharge among N.C. hospitals using additional independent variables.