EconPapers    
Economics at your fingertips  
 

The Role of Overbilling in Hospitals’ Earnings Management Decisions

Jonas Heese ()
Additional contact information
Jonas Heese: Harvard Business School, Accounting and Management Unit

No 18-026, Harvard Business School Working Papers from Harvard Business School

Abstract: This paper examines the role of overbilling in hospitals' earnings management choices. Overbilling by hospitals is a form of revenue manipulation that involves misclassifying a patient into a diagnosis-related group that yields higher reimbursement. As overbilling allows hospitals to increase revenues without altering operations, affecting costs, or having to reverse such behavior in the future, I propose and find that overbilling reduces hospitals' use of managing accruals or cutting discretionary expenditures. Next, I find that hospital managers prefer overbilling to managing accruals (cutting discretionary expenditures) when cutting discretionary expenditures (managing accruals) is constrained, and vice versa. Collectively, my findings suggest that overbilling is an important alternative manipulation tool in hospitals.

Keywords: Overbilling; accrual-based earnings management; real activities manipulation; for-profit hospitals (search for similar items in EconPapers)
JEL-codes: I11 I18 M41 M48 (search for similar items in EconPapers)
Date: 2017-09
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:18-026

Access Statistics for this paper

More papers in Harvard Business School Working Papers from Harvard Business School Contact information at EDIRC.
Bibliographic data for series maintained by Soebagio Notosoehardjo ().

 
Page updated 2019-10-16
Handle: RePEc:hbs:wpaper:18-026