Massachusetts acute-care hospitals held their expenses to the lowest rate of increase in a decade, but their operating margins still fell to less than 1%, according to figures released last week by the Massachusetts Hospital Association.
Results of the survey are based on the responses of 66 acute-care hospitals that projected their fiscal 1994 operating results. Final audited financial results will be available early in 1995, the association said.
Hospitals projected a median expense increase of 3.7%, down from 5.4% a year ago. Revenues were projected to increase 2.7% in fiscal 1994, compared with 5.4% a year ago.
The median operating margins of surveyed hospitals declined to 0.7% from 1.4% in fiscal 1993. The hospital association compared that with the median fiscal 1993 operating margin of 2.2% for hospitals nationwide, a figure obtained from the Center for Healthcare Industry Performance Studies, Columbus, Ohio.
Association spokesman Andrew Dreyfus said managed-care forces in the state started demonstrating their influence on revenues, forcing hospitals to work within a lower rate of growth and get internal expenses under control.
Massachusetts has nearly 40% enrollment in HMOs, the highest percentage in the nation, and it's the fastest-growing enrollment as well, Mr. Dreyfus said. But although HMO enrollment in recent years had been high compared with other states, "HMOs did not historically operate the same way as HMOs in more mature markets," he said.
Managed care had shortened inpatient stays per admission but hadn't curbed the rate of admissions. But now admissions are dropping, too, Mr. Dreyfus said.
That pressure is motivating hospitals to get more efficient, and it's also spurring consolidation and network-building, he said. According to the association's count, 42 hospitals were involved in some type of ownership change-closure, conversion, merger, acquisition or affiliation-during 1993 and 1994.