Hospitals Improve Financially, But Many Are Still In The Red

BOSTON — Massachusetts Hospitals have seen some improvement in their financial performance, but are by no means out of the fiscal woods, according to a Mass. Hospital Assoc. (MHA) survey that tracked results for fiscal year 2004, which ended on Sept. 30.

Approximately 42{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the hospitals surveyed posted operating losses, a slight improvement compared to the year before, the survey revealed. The median total margin was 1.8{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}. Negative total margins were recorded by 25{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the hospitals responding.

MHA Vice President for Health Care Finance Joe Kirkpatrick said the numbers show improvement compared to recent history. “But even those hospitals that are doing better are not making enough to fully recover from years of minimal or negative margins,” he said. “Gains will have to be greater in order for the hospital sector to invest as much as it should to upgrade facilities or equipment.”

Most financial experts say that hospitals should maintain at least a 3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} total margin to be viable over the long term. Wall Street generally demands margins of 7{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} or better before awarding an AA bond rating.