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U.S. hospitals see profits dive, AHA reports

The nation's 5,010 nonfederal community hospitals posted a $17 billion overall profit in fiscal 2008—down 61% from the previous year—amid a punishing recession that caused a $20.5 billion reversal in healthcare providers' investment portfolios, according to new statistics from the American Hospital Association.The 2010 AHA Hospital Statistics guide, which was released to Modern Healthcare on Wednesday, shows that in 2008, U.S. hospitals collected $648 billion in operating revenue, an increase of 6.4% over the prior fiscal year. That left the community hospitals' overall profit margin at 2.6%, which was less than half the record-setting margin seen the year before.

In 2007 and 2008, investment returns played a significant role in overall profitability at the hospitals. In 2008, hospitals reported a $4.5 billion loss on their investments, the first time in at least 15 years that the investments lost money. In 2007, hospitals enjoyed $17 billion in nonoperating revenue, which exceeded the previous record by 40% and led to the highest profits on record in the hospital industry.

However even accounting for the recent investment losses, hospitals showed growth in net revenue, which includes both operating and investment sources. The net revenue of $643 billion represented 2.8% growth from the year prior, while total expenses grew by 7.4% to $627 billion.

The total number of U.S. community hospitals in 2008 also surpassed 5,000 for the first time in 10 years, growing by 113 facilities over the year before.

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