MADISON, Wis. -- Wisconsin hospitals saw a dip in their total profit margins in 1996, according to a report released last week by the state hospital association.
In 1996 Wisconsin hospitals had a median total profit margin of 6.3%, down from 6.6% the year before.
Despite the dip in 1996, hospitals in the dairy state still were better off than in 1994, when the median total profit margin was 5.9%.
The report, released by the Wisconsin Health & Hospital Association, is based on information compiled by the state Office of Health Care Information. It includes 1996 financial information from all but one of Wisconsin's 123 acute-care hospitals as well as its 19 specialty hospitals.
The drop in Wisconsin hospitals' total profit margins in 1996 coincided with record profits posted by acute-care hospitals nationally.
According to information released earlier this year by the American Hospital Association, hospitals' aggregate profits jumped more than 25% in 1996 to more than $21 billion. That translated to a 6.7% profit margin for the industry that year (Jan. 12, p. 2).
Carl Templin, a spokesman for the state hospital association, said several factors might have caused Wisconsin to buck the trend of increasing profit margins. For one thing, the report for 1996 included fewer hospitals than the year before, which affected the median. Templin also speculated that 1996 began a leveling-off period.
Besides total profit margins, the 50-page report from the state association includes operating profit margins, uncompensated-care expenses and other financial factors.
Along with a dip in total profit margins, operating margins at the state's hospitals also declined.
The median operating margin was 4.9% in 1996, down from a peak of 5.3% in 1995. In 1994 the margin was 5.0%.
While total and operating margins were down, hospitals provided more uncompensated care.
The median percentage of uncompensated care rose to 2.9% in 1996 from 2.7% in 1995 and 2.6% in 1994.
Uncompensated care is patient care given free of charge, including charity care and bad debt.
According to the AHA, uncompensated-care costs for hospitals nationally in 1996 increased less than 3% to $18 billion (March 16, p. 3).