Healthcare Business News

Hospitals saw profits rise more than 50% in 2010, AHA figures say

By Ashok Selvam
Posted: January 5, 2012 - 6:15 pm ET

American community hospitals posted more than $50 billion in total profits in 2010, an increase of more than 50% over 2009, according to the American Hospital Association.

The 2012 AHA Hospital Statistics guide surveyed the 4,985 members of the Chicago-based group, and officials released the latest edition of the guide on Thursday. Their numbers showed community hospitals posted $730.9 billion in net revenues in 2010, versus $690.5 billion in 2009. The results also revealed community hospitals made $52.9 billion in total profits in 2010 for a 7.2% margin. That compares with $34.4 billion in profits in 2009 for a 5% profit margin.

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Spending also increased in 2010 by 3.3% or $21.8 billion, with community hospitals spending $678 billion in 2010, compared with $656.2 billion in 2009.

Community hospitals made $717.7 billion in operating revenues for $39.7 billion in profits in 2010. That makes for a 5.5% operating profit, up from 4.4% in 2009 when operating revenues were $686 billion and operating profits were $29.9 billion. Hospital officials say operating income is a better measure of financial performance.

The cost of payrolls and benefits increased to $348.1 billion in 2010, compared with $338 billion the year before. Hospitals spent about the same percentage of their budgets on labor-related costs, as payrolls and benefits took up 51.3% of budgets in 2010, compared with 51.5% in 2009.

Caroline Steinberg, the AHA's vice president of trends analysis, in a report that prefaced the book's statistics, highlighted findings that showed an increased number of doctors employed by hospitals. She reasoned the increase shows how hospitals are bolstering physician ties as they prepare for changes delivery systems: “Success will depend on hospitals' ability to work with physicians to achieve both greater efficiency and improved outcomes,” Steinberg wrote.

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