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The Effect of the Magnet Recognition Signal on Hospital Financial Performance

Karim, Saleema A., PhD; Pink, George H., PhD; Reiter, Kristin L., PhD; Holmes, George M., PhD; Jones, Cheryl B., PhD; Woodard, Elizabeth K., PhD

doi: 10.1097/JHM-D-17-00215
ONLINE-ONLY: RESEARCH ARTICLES

EXECUTIVE SUMMARY The objective of this study was to investigate the effect of the Magnet Recognition (MR) signal on hospital financial performance. MR is a quality designation granted by the American Nurses Credentialing Center (ANCC). Growing evidence shows that MR hospitals are associated with various interrelated positive outcomes that have been theorized to affect hospital financial performance.

In this study, which covered the period from 2000 to 2010, we applied a pre–post research design using a longitudinal, unbalanced panel of MR hospitals and hospitals that had never received MR designation located in urban areas in the United States. We obtained data for this analysis from Medicare’s Hospital Cost Report Information System, the American Hospital Association Annual Survey Database, the Health Resources & Services Administration’s Area Resource File, and the ANCC website. Propensity score matching was used to construct the final study sample. We then applied a difference-in-difference model with hospital fixed effects to the matched hospital sample to test the effect of the MR signal, while controlling for both hospital and market characteristics.

According to signaling theory, signals aim to reduce the imbalance of information between two parties, such as patients and providers. The MR signal was found to have a significant positive effect on hospital financial performance. These findings support claims in the literature that the nonfinancial benefits resulting from MR lead to improved financial performance. In the current healthcare environment in which reimbursement is increasingly tied to delivery of quality care, healthcare executives may be encouraged to pursue MR to help hospitals maintain their financial viability while improving quality of care.

assistant professor, University of Arkansas for Medical Sciences, Little Rock, Arkansas

professor, Department of Health Policy and Management, Gillings School of Global Public Health, The University of North Carolina at Chapel Hill, North Carolina

professor, Department of Health Policy and Management, Gillings School of Global Public Health, The University of North Carolina at Chapel Hill

associate professor, Department of Health Policy and Management, Gillings School of Global Public Health, The University of North Carolina at Chapel Hill

professor and chair, School of Nursing, The University of North Carolina at Chapel Hill

director, nursing research and evidence-based practice, WakeMed Health & Hospitals, Raleigh, North Carolina

For more information about the concepts in this article, contact Dr. Karim at skarim@uams.edu.

The authors declare no conflicts of interest.

© 2018 Foundation of the American College of Healthcare Executives
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