It's too bad that David Burda resorts to comparing apples to oranges in order to indulge a snickering attitude toward what he apparently perceives to be the hospital industry's penchant for bellyaching ("A fat year for hospitals," Jan. 12, p. 2).
First, new data released by the American Hospital Association revealing that hospitals enjoyed a 6.7% profit margin in 1996 do not necessarily contradict an earlier report showing hospitals posted a -0.8% net patient margin. The higher figure includes investment income and other nonoperating revenues. A revised net patient margin is not included in the article.
Second, the Bureau of Labor Statistics had not "underestimated hospitals' revenue growth" when it reported a 1.4% increase for its Producer Price Index in 1996. The PPI captures the change in price for a single hospital stay. It measures inflation, not revenue, which is a product of price and volume.
I wish that my beef with this article were only a matter of nitpicking. MODERN HEALTHCARE, however, enjoys a stature by which its words can fuel the opinions of the general public and political leaders responsible for decisions ultimately affecting hospital finances. Even with erroneous comparisons, Burda could have gotten it right by underscoring the positive news of a moderate 2.9% increase for hospital expenses. Additionally, hospital profits can be used to beef up information systems that can better manage integrated care -- the need for which, I believe, MODERN HEALTHCARE has strongly emphasized in the past.
Glenn M. Pearl
Editor, Rate Controls
Editor's note: The AHA's latest Hospital Statistics report did not include a separate breakout of hospitals' 1996 aggregate patient-care expenses, making a calculation of patient-care profitability impossible.