Hospital Finances: More Losses And Paper-thin Margins

BOSTON — The most recent Mass. Hospital Assoc. survey of hospital finances revealed that 52{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the Commonwealth’s hospitals reported negative operating margins in fiscal year 2003 (Oct. 2002 through Sept. 2003). 

Totaling the margins of all hospitals — those that lost money and those that did not — produces an aggregate operating margin of 0.1{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, miniscule in the face of mounting hospital requirements for investment in needed equipment or facility upgrades.

Total margins, which include investment income and fundraising, were 1.3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} in 2003, a modest improvement over last year’s 1{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} total margin (3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} to 5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} is the national norm).

New patient service revenue increased by 7.6{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} from FY 2002, while total revenue grew by 9{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, the MHA reported. But hospital expenses are growing at unprecedented rates due to shortages in the health care workforce and spiraling pharmacy and medical technology costs. Payroll and employee benefit expenses grew by 10.1{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, and total expenses by 8{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}.

This is the eighth year of financial stress among the state’s hospitals, with aggregate hospital operating losses in six of those eight years, the MHA reported.

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