Objectives: This paper evaluates the drivers of profitability for a large sample of U.S. hospitals. Following a methodology frequently used by financial analysts, we use a DuPont analysis as a framework to evaluate the quality of earnings. By decomposing returns on equity (ROE) into profit margin, total asset turnover, and capital structure, the DuPont analysis reveals what drives overall profitability. Methods: Profit margin, the efficiency with which services are rendered (total asset… CONTINUE READING