It's hard to put a happy face on numbers like these:
* The average operating profit margin of New Jersey hospitals dipped to a decade-low 0.8% in 1997.
* Average total profit margin for the facilities hit 2.5% in 1997, the slimmest since 1992.
* Statewide, one-third of hospitals posted a loss, and 30% are losing money on operations.
* Days' cash on hand remained a low 39.8 days. In recent years, the hospitals' cash supply, on average, hasn't risen much above 40 days. Nationally, the average hospital is able to sock away more than twice that amount.
The 111-member New Jersey Hospital Association doesn't paint a pretty picture in its 21st annual report on the financial health of its members, calling the situation "grim." The report offers a composite drawn from the 1997 financial statements of 68 acute-care hospitals and hospital systems and six specialty hospitals.
Although a recent national report on hospitals' financial status declares the industry fiscally fit, signs of volatility abound (Dec. 21-28, p. 2 and p. 48).
NJHA President Gary Carter chalks up hospitals' strained operating margins to a number of factors: inadequate state subsidization of charity-care services, late payments from HMOs, managed-care payment shortfalls and reduced Medicare and Medicaid reimbursement.
New Jersey hospitals historically have operated on thinner margins than hospitals in most states, the result of years of state rate control. The state moved to a deregulated system in 1993. Still, Garden State providers remain less profitable than hospitals nationally.
For example, the Center for Healthcare Industry Performance Studies, Columbus, Ohio, reported that total margins reached a median of 5.4% for all hospitals in 1997. That betters New Jersey by nearly three percentage points.
The NJHA's report provides comparative data for the five-year period from 1993 through 1997. In 1997, income from operations dropped to an average of $78.9 million, compared with $207.8 million in 1996 and $429.1 million in 1993.