The hospital industry, which is battling public perceptions that it's more interested in making money than caring for patients, posted record profits in 1995, American Hospital Association figures reveal.
Aggregate hospital profits jumped nearly 24% that year to slightly more than $17 billion (See chart).
The figures are buried within the Chicago-based AHA's annual compendium of hospital financial and utilization data. The AHA released the 176-page report, Hospital Statistics: Emerging Trends in Hospitals, last week.
The report's release comes at a time when the AHA is warning its hospital members that public support of their activities is waning because they're perceived as greedy businesses rather than benevolent community institutions (See related story below).
In a confidential report sent to members in late December, the AHA said continued erosion of public support could hurt the industry's political leverage, and they need to do a better job explaining the community benefits of what they're doing in their respective markets (Jan. 13, p. 3).
The AHA released a similar report publicly last week at its annual membership meeting in Washington. It's one of three recent public opinion polls that uncovered a deep-seated mistrust of hospitals.
The new hospital statistics report from the AHA also follows by a month a report released by the American Medical Association that revealed physicians' net income also hit a record high in 1995 (Jan. 6, p. 2).
For hospitals, record profits that year were driven by a 4.5% increase in total net revenues to about $302.6 billion, the figures show. That's up from a 4.2% increase in 1994. Total hospital expenses, meanwhile, rose 3.6% in 1995 to about $285.6 billion, matching the increase in 1994.
"Reflecting the shortening (length of stay), efforts to restructure staff and other management strategies, community hospitals saw little change in the growth of expenses," according to the AHA report.
All that translated into a 5.6% profit margin for hospitals, up from 4.7% in 1994 and the highest since 1985, when hospitals' profit margin hit 6%.
The latest report contradicts an AHA report released last May that said hospital profitability dropped in 1995.
The earlier report is based on a monthly survey of a representative sample of about 2,000 hospitals. The annual statistics report is based on financial information from virtually every acute-care hospital in the country. The latest report includes data from 5,194 acute-care hospitals.