Two months after the American Hospital Association said hospitals posted record profits in 1994, a new AHA report says things were less rosy in 1995.
In its latest quarterly hospital economic report, the Chicago-based hospital trade group said hospitals lost money on direct patient care last year for the first time since 1990.
The AHA said hospitals posted a -0.4% patient margin last year, compared with a 0.2% margin in 1994.
The AHA's patient margin figures measure profitability from patient-care revenues only, excluding other sources of operating revenues. Hence, the AHA's patient margin traditionally is lower than operating margin figures released by other organizations that report hospital financial data.
Overall, the AHA said hospitals last year posted a 5.1% total profit margin, which includes all forms of revenues, down from 5.4% in 1994.
The dip in profitability stems from expense growth outpacing revenue growth. The AHA said hospital expenses rose 5.3% last year, up from 5%. Revenues rose 5%, compared with 4.9% over the previous period.
Unlike the results of its annual survey of hospitals, the data in the AHA's quarterly economic report are based on financial information submitted to the AHA by a representative sample of 2,000 hospitals. The annual survey results are based on data submitted to the AHA by virtually every acute-care facility in the country. For example, some 5,229 hospitals supplied data to the AHA for its 1994 annual report.
The results of that report, released in March, found that aggregate profits earned by the nation's acute-care hospitals hit a record high of $13.8 billion in 1994. That represented a 4.7% total profit margin (March 25, p. 2).
Although the results of the quarterly survey and the annual survey historically differ, the quarterly survey often picks up trends later validated by the more comprehensive annual survey.
For example, hospital utilization last year was fairly robust, according to the quarterly report. Admissions rose 1.4% last year, compared with a 0.9% increase in 1994, and outpatient visits jumped 8.3% in 1995 compared with a 7% rise a year earlier, the AHA said.
Length of stay, meanwhile, hit a record low of 5.7 days last year, down from 6 days in 1994, according to the AHA. That finding contradicts a recent report from HCIA, a Baltimore-based healthcare information company, that said the average length of stay at hospitals inched up last year for the first time since 1979.