Hospitals in markets with a significant managed-care presence posted bigger bottom-line margins last year than hospitals in low-managed-care markets, a new analysis shows.
It's potent evidence that the hospital industry is coping well with pricing pressures by wringing out costs.
This trend and other key findings are highlighted in The 1997-98 Almanac of Hospital Financial and Operating Indicators. The almanac, published annually by the Center for Healthcare Industry Performance Studies, reviews the industry's performance over the past five years and forecasts its future direction.
Hospitals in high-managed-care markets posted a median total margin of 4.6% in 1996, the same as the previous year. And in medium-managed-care markets, the median rose to 4.4% from 3.8% in 1995. Meanwhile, the number slipped to 4.1% from 4.2% in low-managed-care markets.
Nationally, total margins reached a five-year high of 5% in 1996.
Despite a glowing national picture, some sectors of the industry remain troubled. Small urban hospitals fared the worst in 1996, the report says.
"Small urban hospitals have poor financial flexibility, and their ability to withstand increased competition is doubtful," says William Cleverley, president of Columbus, Ohio-based CHIPS.