OBJECTIVE:This study examines the impact of accountable care organization (ACO) maturity on inpatient costs, quality of care, and patient safety for hospitals participating in ACOs initiated by CMS relative to nonparticipants. STUDY DESIGN:Quasi-experimental evaluation of hospitals before and after joining a CMS ACO using a difference-in-differences design during the period from 2010 to 2013. METHODS:Propensity score-matched groups of hospitals were used to estimate the combined effects of ACO maturity and CMS ACO participation on inpatient costs, quality, and patient safety outcomes. Total treatment costs, mortality rates for 4 common conditions, and 4 perioperative adverse events were investigated. Analyses were based on state-level data from the Healthcare Cost and Utilization Project. RESULTS:We matched 121 CMS ACO-participating hospitals and 853 nonparticipating hospitals. Hospitals with an ACO maturity score of 0 had significantly worse acute myocardial infarction mortality and perioperative pulmonary embolism or deep vein thrombosis rates than nonparticipants. These differences were no longer significant with increasing ACO maturity. Higher ACO maturity was associated with significant improvements in accidental punctures and lacerations among hospital CMS ACO participants. No other significant trends were observed. CONCLUSIONS:Findings suggest a potential positive effect of hospital CMS ACO participation with increasing maturity. However, use of early ACO data, a short follow-up period, and other limitations hindered the ability to identify significant trends. Nonetheless, ACO maturity scores and new outcome measures may offer a promising approach for tracking the long-term impact of hospital ACO participation in future research and policy evaluations.

ObjectivesTo evaluate the changes in dental insurance and utilization among pregnant women before and after the pregnancy Medicaid dental benefit policy implementation in 2015 in Virginia.MethodsWe used pooled cross-sectional data from six cycles of the Virginia Pregnancy Risk Assessment Monitoring System on women aged ≥21 years. Using logistic regression models and a difference-in-difference design, we compared the effects of policy implementation on dental insurance and utilization between pre-policy (2013–2014) and post-policy period (2016–2019) among women enrolled in Medicaid (treatment, N = 1,105) vs. those with private insurance (control, N = 2,575). A p-value of 0.05 was considered significant.ResultsAmong Medicaid-enrolled women, the report of dental insurance (71.6%) and utilization (37.7%) was higher in the post-period compared to their pre-period (44.4% and 30.3%, respectively) estimates but still remained lower than the post-period estimates among women with private insurance (88.0% and 59.9%, respectively). Adjusted analyses found that Medicaid-enrolled women had a significantly greater change in the probability of reporting dental insurance in all post-period years than women with private insurance, while the change in the probability of utilization only became statistically significant in 2019. In 2019, there was a 16 percentage point increase (95% CI = 0.05, 0.28) in the report of dental insurance and a 17 percentage point increase (95% CI = 0.01–0.33) in utilization in treatment group compared to controls.ConclusionsThe 2015 pregnancy Medicaid dental benefit increased dental insurance and dental care utilization among Medicaid-enrolled women and reduced associated disparities between Medicaid and privately insured groups.

BACKGROUND The Centers for Medicare and Medicaid Services (CMS) implemented a core measure sepsis (SEP-1) bundle in 2015. One element was initiation of broad-spectrum antibiotics within 3 hours of diagnosis. The policy has the potential to increase antibiotic use and Clostridioides difficile infection (CDI). We evaluated the impact of SEP-1 implementation on broad-spectrum antibiotic use and CDI occurrence rates. METHODS Monthly adult antibiotic data for 4 antibiotic categories (surgical prophylaxis, broad-spectrum for community-acquired infections, broad-spectrum for hospital-onset/multidrug-resistant [MDR] organisms, and anti-methicillin-resistant Staphylococcus aureus [MRSA]) from 111 hospitals participating in the Clinical Data Base Resource Manager were evaluated in periods before (October 2014-September 2015) and after (October 2015-June 2017) policy implementation. Interrupted time series analyses, using negative binomial regression, evaluated changes in antibiotic category use and CDI rates. RESULTS At the hospital level, there was an immediate increase in the level of broad-spectrum agents for hospital-onset/MDR organisms (+2.3%, P = .0375) as well as a long-term increase in trend (+0.4% per month, P = .0273). There was also an immediate increase in level of overall antibiotic use (+1.4%, P = .0293). CDI rates unexpectedly decreased at the time of SEP-1 implementation. When analyses were limited to patients with sepsis, there was a significant level increase in use of all antibiotic categories at the time of SEP-1 implementation. CONCLUSIONS SEP-1 implementation was associated with immediate and long-term increases in broad-spectrum hospital-onset/MDR organism antibiotics. Antimicrobial stewardship programs should evaluate sepsis treatment for opportunities to de-escalate broad therapy as indicated.

Background: Adult smokers with symptoms of any mental illness (AMI) are highly dependent on nicotine and may face additional difficulty quitting smoking. While there is evidence that adult smokers with AMI have high dependence, there is insufficient evidence regarding the unique role that AMI may play in moderating the relationship between dependence and cessation outcomes over time. Methods: 7290 current established adult smokers at Wave 1 (2013-2014) of the PATH Study also participated in data collection in Waves 2-4 (2014-2018). Linear probability models with individual-level random effects were fit to the data, modeling associations between AMI, nicotine dependence, and the 1) likelihood of achieving cessation during the study period, 2) making a cessation attempt within the previous 12 months, and 3) log of past 30-day total consumption of cigarettes. Results: Adults who experienced both AMI symptoms and high dependence were 4.7 percentage points (PP) less likely to achieve cessation at any point during the study period (p < 0.01) and smoked more cigarettes per month (beta = 0.214, p < 0.05) than adults with AMI who were not highly dependent, despite being as likely to attempt to quit. Adults with AMI who were not highly dependent were 4.6 PP more likely to report a quit attempt and 1.6 PP more likely to achieve cessation than those with neither AMI nor high dependence. Conclusions: Adults with AMI are particularly affected by the burden of tobacco use, in part because of the likely interaction between nicotine dependence and AMI. Tobacco control efforts that focus on this interplay may provide an opportunity to better target interventions for this vulnerable population.

Background: Medicare was an early innovator of accountable care organizations (ACOs), establishing the Medicare Shared Savings Program (MSSP) and Pioneer programs in 2012–2013. Existing research has documented that ACOs bring together an array of health providers with hospitals serving as important participants. Purpose: Hospitals vary markedly in their service structure and organizational capabilities, and thus, one would expect hospital ACO participants to vary in these regards. Our research identifies hospital subgroups that share certain capabilities and competencies. Such research, in conjunction with existing ACO research, provides deeper understanding of the structure and operation of these organizations. Given that Medicare was an initiator of the ACO concept, our findings provide a baseline to track the evolution of ACO hospitals over time. Methodology/Approach: Hierarchical clustering methods are used in separate analyses of MSSP and Pioneer ACO hospitals. Hospitals participating in ACOs with 2012–2013 start dates are identified through multiple sources. Study data come from the Centers for Medicare and Medicaid Services, American Hospital Association, and Health Information and Management Systems Society. Results: Five-cluster solutions were developed separately for the MSSP and Pioneer hospital samples. Both the MSSP and Pioneer taxonomies had several clusters with high levels of health information technology capabilities. Also distinct clusters with strong physician linkages were present. We examined Pioneer ACO hospitals that subsequently left the program and found that they commonly had low levels of ambulatory care services or health information technology. Conclusion: Distinct subgroups of hospitals exist in both the MSSP and Pioneer programs, suggesting that individual hospitals serve different roles within an ACO. Health information technology and physician linkages appear to be particularly important features in ACO hospitals. Practice Implications: ACOs need to consider not only geographic and service mix when selecting hospital participants but also their vertical integration features and management competencies.

California implemented hospital-unit level licensed nurse minimum staffing regulations in 2004, with more stringent regulations applying for certain units in 2005 and 2008. All analyses agree that there were significant increases in Registered Nurse (RN) staffing levels, especially in hospitals with lower preregulation staffing. Analyses of the labor market effects of the regulations, however, come to mixed conclusions. I revisit the labor market effects of the regulations using different data and a different analytical model for RN wages. For the analysis of growth of RN employment, I use information from the National Sample Survey of Registered Nurses, the largest and most complete source of information on nurse employment, and find that RN employment grew significantly faster in California than in other states after the regulations were implemented. For the analysis of changes in RN wages, I apply a panel difference-in-difference-in-difference model to wage averages in Metropolitan Statistical Areas, controlling for MSA-, occupation-, and time-fixed effects, and all their two-way interactions. Analysis of changes in the differential between RN wages and wages in four other selected occupations indicates significant growth in RN wages after the regulations were implemented.

Background: In 2012, the Centers for Medicare and Medicaid Services (CMS) initiated the Medicare Shared Savings Program (MSSP) and Pioneer Accountable Care Organization (ACO) programs. Organizations in the MSSP model shared cost savings they generated with CMS, and those in the Pioneer program shared both savings and losses. It is largely unknown what hospital and environmental characteristics are associated with the development of CMS ACOs with one- or two-sided risk models. Purpose: The aim of this study was to assess the organizational and environmental characteristics associated with hospital participation in the MSSP and Pioneer ACOs. Methodology: Hospitals participating in CMS ACO programs were identified using primary and secondary data. The ACO hospital sample was linked with the American Hospital Association, Health Information and Management System Society, and other data sets. Multinomial probit models were estimated that distinguished organizational and environmental factors associated with hospital participation in the MSSP and Pioneer ACOs. Results: Hospital participation in both CMS ACO programs was associated with prior experience with risk-based payments and care management programs, advanced health information technology, and location in higher-income and more competitive areas. Whereas various health system types were associated with hospital participation in the MSSP, centralized health systems, higher numbers of physicians in tightly integrated physician–organizational arrangements, and location in areas with greater supply of primary care physicians were associated with Pioneer ACOs. Favorable hospital characteristics were, in the aggregate, more important than favorable environmental factors for MSSP participation. Conclusion: MSSP ACOs may look for broader organizational capabilities from participating hospitals that may be reflective of a wide range of providers participating in diverse markets. Pioneer ACOs may rely on specific hospital and environmental characteristics to achieve quality and spending targets set for two-sided contracts. Practice Implications: Hospital and ACO leaders can use our results to identify hospitals with certain characteristics favorable to their participation in either one- or two-sided ACOs.

This study evaluates quality performance of hospitals participating in Medicare Shared Savings and Pioneer Accountable Care Organization (ACO) programs relative to nonparticipating hospitals. Overall, 198 ACO participating and 1210 propensity score matched, nonparticipating hospitals were examined in a difference-in-difference analysis, using data from 17 states in the years 2010-2013. The authors studied preventable hospitalizations for conditions sensitive to high-quality ambulatory care—chronic obstructive pulmonary disease (COPD) and asthma, chronic heart failure (CHF), complications of diabetes—and 30-day all-cause readmissions potentially influenced by hospital care. A decrease was found in preventable hospitalizations for COPD and asthma and for diabetes complications for ACO participating hospitals, but no significant differences for preventable CHF hospitalizations and 30-day readmissions. Mixed results may be attributable to insufficient incentives for ACO participating hospitals to decrease 30-day readmissions, whereas disease-focused initiatives may have a beneficial effect on preventable hospitalizations for COPD and asthma and complications of diabetes.

INTRODUCTION:Prior to expansion of Medicaid under the Affordable Care Act, some states obtained Section 1115 waivers from the federal government that allowed them to expand eligibility for Medicaid to adult populations that were not covered previously. Expansion waivers in these states differed in their generosity and year of implementation, creating variation in coverage availability and program longevity across states. This study examined the association between generosity and duration of Medicaid expansion waivers and access to preventive services.METHODS:The 2012 Medical Expenditure Panel Survey data were used to estimate adjusted logistic models in 2016, comparing outcomes among low-income non-elderly adults living in generous (Medicaid eligibility threshold ≥138% federal poverty level) and moderate (Medicaid eligibility threshold <138% federal poverty level) waiver states, relative to no-waiver states.RESULTS:Moderate and generous waivers were associated with statistically significant (p<0.001) increases in probabilities of having a usual source of care and a blood pressure check, relative to states without a waiver to expand. Low-income individuals living in states with longer waiver durations had better access to healthcare services than a similar group living in comparison states.CONCLUSIONS:Not only is Medicaid waiver generosity associated with improving access to healthcare services, but the combination of generosity and longer duration of a waiver also intensifies the association. As states gain flexibility in designing their Medicaid programs, the healthcare benefits associated with both generosity and duration of waivers are important considerations for policy makers.

Standard setters and regulators face an ever-present concern over the discretionary influence firms have in financial reporting. For information to have enhanced relevance, some level of discretion in financial reporting is often necessary. Prior work suggests that firms may be opportunistic in exercising choice and influence where discretion is available to advantageously affect reported results. This study examines if aggressive firms take the opportunity afforded by the wide discretion in Level 3 valuations under the original Accounting Standards Codification (ASC) 820 standard to manipulate financial reporting. Minimal evidence is found to support an association between Level 3 valuations and other metrics reflecting earnings management. The findings may be driven by the high-level, and typically limited, disclosures that firms are required to make under the originally promulgated ASC 820. This primary finding suggests that FASB's move to increase the disclosures required under the standard was warranted.

BACKGROUNDStates routinely may consider rollbacks of Medicaid expansions to address statewide economic conditions. To the authors' knowledge, little is known regarding the effects of public insurance contractions on health outcomes. The current study examined the effects of the 2005 Medicaid disenrollment in Tennessee on breast cancer stage at the time of diagnosis and delays in treatment among nonelderly women.METHODSThe authors used Tennessee Cancer Registry data from 2002 through 2008 and estimated a difference‐in‐difference model comparing women diagnosed with breast cancer who lived in low‐income zip codes (and therefore were more likely to be subject to disenrollment) with a similar group of women who lived in high‐income zip codes before and after the 2005 Medicaid disenrollment. The study outcomes were changes in stage of disease at the time of diagnosis and delays in treatment of >60 days and >90 days.RESULTSOverall, nonelderly women in Tennessee were diagnosed at later stages of disease and experienced more delays in treatment in the period after disenrollment. Disenrollment was found to be associated with a 3.3‐percentage point increase in late stage of disease at the time of diagnosis (P = .024), a 1.9‐percentage point decrease in having a delay of >60 days in surgery (P = .024), and a 1.4‐percentage point decrease in having a delay of >90 days in treatment (P = .054) for women living in low‐income zip codes compared with women residing in high‐income zip codes.CONCLUSIONSThe results of the current study indicate that Medicaid disenrollment is associated with a later stage of disease at the time of breast cancer diagnosis, thereby providing evidence of the potential negative health impacts of Medicaid contractions. Cancer 2017;123:3312‐9. © 2017 American Cancer Society.

Medicaid expansion under the Affordable Care Act facilitates access to care among vulnerable populations, but 21 states have not yet expanded the program. Medicaid expansions may provide increased access to care for cancer survivors, a growing population with chronic conditions. We compare access to health care services among cancer survivors living in non-expansion states to those living in expansion states, prior to Medicaid expansion under the Affordable Care Act.We use the 2012 and 2013 Behavioral Risk Factor Surveillance System to estimate multiple logistic regression models to compare inability to see a doctor because of cost, having a personal doctor, and receiving an annual checkup in the past year between cancer survivors who lived in non-expansion states and survivors who lived in expansion states.Cancer survivors in non-expansion states had statistically significantly lower odds of having a personal doctor (adjusted odds ratio [AOR] 0.76, 95 % confidence interval [CI] 0.63-0.92, p < 0.05) and higher odds of being unable to see a doctor because of cost (AOR 1.14, 95 % CI 0.98-1.31, p < 0.10). Statistically significant differences were not found for annual checkups.Prior to the passage of the Affordable Care Act, cancer survivors living in expansion states had better access to care than survivors living in non-expansion states. Failure to expand Medicaid could potentially leave many cancer survivors with limited access to routine care.Existing disparities in access to care are likely to widen between cancer survivors in Medicaid non-expansion and expansion states.

Abstract Purpose: To assess the effects of Medicaid disenrollment on stage at diagnosis and delay in surgery for female breast cancer among nonelderly women. Background: Although Medicaid expansions have received considerable attention in the literature, Medicaid contractions have received much less attention. Tennessee's Medicaid program experienced a dramatic Medicaid contraction when the program disenrolled approximately 170,000 nonelderly adults after implementing a new benefit policy in 2005. Despite the fact that this was the largest disenrollment in the history of Medicaid, little is known about the effects of this policy change on access to care and health outcomes. This is the first study, to our knowledge, to consider the effect of disenrollment on stage at diagnosis and delay in surgery for breast cancer. Methods: We use 2002-2008 data from Tennessee Cancer Registry which collects data on newly diagnosed cases of malignant disease that occur to Tennessee residents from all hospitals, laboratories, facilities and healthcare practitioners. The sample used for this study consists of women aged 21 to 64 who were diagnosed with breast cancer and living in Tennessee during the period of study. We merge data on zip code median income with the Tennessee Cancer Registry data and estimate a difference-in-differences model. We calculate the changes in stage at diagnosis, more than 60-days delay in surgery, and more than 90-days delay in surgery for female breast cancer among women who were diagnosed with breast cancer and had surgery as the first-line treatment. The difference-in-differences model compares women who were living in low-income zip codes (and thus more likely to be subject to disenrollment) with women who lived in high-income zip codes before and after Tennessee's 2005 Medicaid disenrollment. We control for age, race/ethnicity, marital status, insurance coverage, and year fixed effects. Results: Preliminary results suggest that nonelderly women who lived in low-income zip codes were 2.8 percentage points (p < 0.1) more likely to be diagnosed with late stage (regional or distant) breast cancer, compared to women living in high-income zip codes, after Tennessee's Medicaid disenrollment. In addition, nonelderly women who lived in low-income zip codes were 1.9 percentage points (p < 0.05) less likely to have more than 60-days delay in surgery than women living in high-income zip codes, after the disenrollment. Women who lived in low-income zip codes were also more likely to have more than 90-days delay in surgery, but this difference was not significant. Conclusions: While many states are expanding Medicaid eligibility under the Affordable Care Act, there has been discussion among policymakers in some states to reduce eligibility once full federal funding expires. This study provides evidence on the potential impact of Medicaid disenrollment on delays in diagnosis and performing urgent surgeries to treat late stages of breast cancer among low-income women in states that may consider future changes to Medicaid eligibility. Citation Format: Wafa W. Tarazi, Cathy J. Bradley, Harry D. Bear, David W. Harless, Lindsay M. Sabik. Medicaid disenrollment in Tennessee and disparities in stage at diagnosis and surgery for female breast cancer. [abstract]. In: Proceedings of the Eighth AACR Conference on The Science of Health Disparities in Racial/Ethnic Minorities and the Medically Underserved; Nov 13-16, 2015; Atlanta, GA. Philadelphia (PA): AACR; Cancer Epidemiol Biomarkers Prev 2016;25(3 Suppl):Abstract nr A82.

Background: Implementation of accountable care organizations (ACOs) is currently underway, but there is limited empirical evidence on the merits of the ACO model.Purpose: The aim was to study the associations between delivery system characteristics and ACO competencies, including centralization strategies to manage organizations, hospital integration with physicians and outpatient facilities, health information technology, infrastructure to monitor community health and report quality, and risk-adjusted 30-day all-cause mortality and case-mixed-adjusted inpatient costs for the Medicare population.Methodology: Panel data (2006-2009) were assembled from Florida and multiple sources: inpatient hospital discharge, vital statistics, the American Hospital Association, the Healthcare Information and Management Systems Society, and other databases. We applied a panel study design, controlling for hospital and market characteristics.Principal Findings: Hospitals that were in centralized health systems or became more centralized over the study period had significantly larger reductions in mortality compared with hospitals that remained freestanding. Surprisingly, tightly integrated hospital-physician arrangements were associated with increased mortality; as such, hospitals may wish to proceed cautiously when developing specific types of alignment with local physician organizations. We observed no statistically significant differences in the growth rate of costs across hospitals in any of the health systems studied relative to freestanding hospitals. Although we observed quality improvement in some organizational types, these outcome improvements were not coupled with the additional desired objective of lower cost growth. This implies that additional changes not present during our study period, potentially changes in provider payment approaches, are essential for achieving the ACO objectives of higher quality of care at lower costs.Practice Implications: Provider organizations implementing ACOs should consider centralizing service delivery as a viable strategy to improve quality of care, although the strategy did not result in lower cost growth.

Electronic health records (EHR) are a promising form of health information technology that could help US hospitals improve on their quality of care and costs. During the study period explored (2005-2009), high expectations for EHR diffused across institutional stakeholders in the healthcare environment, which may have pressured hospitals to have EHR capabilities even in the presence of weak technical rationale for the technology. Using an extensive set of organizational theory-specific predictors, this study explored whether five factors - cause, constituents, content, context, and control - that reflect the nature of institutional pressures for EHR capabilities motivated hospitals to comply with these pressures. Using information from several national data bases, an ordered probit regression model was estimated. The resulting predicted probabilities of EHR capabilities from the empirical model's estimates were used to test the study's five hypotheses, of which three were supported. When the underlying cause, dependence on constituents, or influence of control were high and potential countervailing forces were low, hospitals were more likely to employ strategic responses that were compliant with the institutional pressures for EHR capabilities. In light of these pressures, hospitals may have acquiesced, by having comprehensive EHR capabilities, or compromised, by having intermediate EHR capabilities, in order to maintain legitimacy in their environment. The study underscores the importance of our assessment for theory and policy development, and provides suggestions for future research.

This study tests whether changes in licensed nurse staffing led to changes in patient safety, using the natural experiment of 2004 California implementation of minimum staffing ratios. We calculated counts of six patient safety outcomes from California Patient Discharge Data from 2000 through 2006, using the Agency for Healthcare Research and Quality Patient Safety Indicators (PSI) software. For patients experiencing nonmortality-related PSIs, we measured mean lengths of stay. We estimated differencein-difference equations of changes in PSIs using Poisson models and calculated the marginal impact of nurse staffing on outcomes from fixed-effect Poisson regressions. Licensed nurse staffing increased in the postregulation period, except for hospitals in the highest quartile of preregulation staffing. Growth in registered nurse staffing was associated with improvement for only one PSI and reduced length of stay for one PSI. Higher registered nurse staffing per patient day had a limited impact on adverse events in California hospitals.

OBJECTIVE:To determine whether, following implementation of California's minimum nurse staffing legislation, changes in acuity-adjusted nurse staffing and quality of care in California hospitals outpaced similar changes in hospitals in comparison states without such regulations.DATA SOURCES/STUDY SETTING:Data from the American Hospital Association Annual Survey of Hospitals, the California Office of Statewide Health Planning and Development, the Hospital Cost Report Information System, and the Agency for Healthcare Research and Quality's Health Care Cost and Utilization Project's State Inpatient Databases from 2000 to 2006.STUDY DESIGN:We grouped hospitals into quartiles based on their preregulation staffing levels and used a difference-in-difference approach to compare changes in staffing and in quality of care in California hospitals to changes over the same time period in hospitals in 12 comparison states without minimum staffing legislation.DATA COLLECTION/EXTRACTION METHODS:We merged data from the above data sources to obtain measures of nurse staffing and quality of care. We used Agency for Healthcare Research and Quality's Patient Safety Indicators to measure quality.PRINCIPAL FINDINGS:With few exceptions, California hospitals increased nurse staffing levels over time significantly more than did comparison state hospitals. Failure to rescue decreased significantly more in some California hospitals, and infections due to medical care increased significantly more in some California hospitals than in comparison state hospitals. There were no statistically significant changes in either respiratory failure or postoperative sepsis.CONCLUSIONS:Following implementation of California's minimum nurse staffing legislation, nurse staffing in California increased significantly more than it did in comparison states' hospitals, but the extent of the increases depended upon preregulation staffing levels; there were mixed effects on quality.

This study tests whether changes in licensed nurse staffing led to changes in patient safety, using the natural experiment of 2004 California implementation of minimum staffing ratios. We calculated counts of six patient safety outcomes from California Patient Discharge Data from 2000 through 2006, using the Agency for Healthcare Research and Quality Patient Safety Indicators (PSI) software. For patients experiencing nonmortality-related PSIs, we measured mean lengths of stay. We estimated difference-in-difference equations of changes in PSIs using Poisson models and calculated the marginal impact of nurse staffing on outcomes from fixed-effect Poisson regressions. Licensed nurse staffing increased in the postregulation period, except for hospitals in the highest quartile of preregulation staffing. Growth in registered nurse staffing was associated with improvement for only one PSI and reduced length of stay for one PSI. Higher registered nurse staffing per patient day had a limited impact on adverse events in California hospitals.

OBJECTIVE:To estimate the effect of minimum nurse staffing ratios on California acute care hospitals' financial performance. DATA SOURCES/STUDY SETTING:Secondary data from Medicare cost reports, the American Hospital Association's (AHA) Annual Survey, and the California Office of Statewide Health Planning and Development (OSHPD) are combined from 2000 to 2006 for 203 hospitals in California and 407 hospitals in 12 comparison states. STUDY DESIGN:The study employs a difference-in-difference analytical approach. Hospitals are grouped into quartiles based on pre-regulation nurse staffing levels in adult medical-surgical and pediatric units (quartile 1=lowest staffing). Differences in operating margin, operating expenses per day, and inpatient operating expenses per discharge for California hospitals within a staffing quartile during the period of regulation are compared to differences at hospitals in comparison states during the same period. DATA COLLECTION/EXTRACTION METHODS:Hospital data from Medicare cost reports are merged with nurse staffing measures obtained from AHA and from OSPHD. PRINCIPAL FINDINGS:Relative to hospitals in comparison states, operating margins declined significantly for California hospitals in quartiles 2 and 3. Operating expenses increased significantly in quartiles 1, 2, and 3. CONCLUSIONS:Implementation of minimum nurse staffing legislation in California put substantial financial pressure on some hospitals.