Aggregate profits at the nation's hospitals climbed 3% in 1997 to a record $21.9 billion, new data from the American Hospital Association show.
Those dollars gave hospitals a profit margin of 6.6%-the second-highest aggregate margin ever.
But there are signs the boom for hospitals may be tapering off.
While hospitals still fattened their coffers in 1997, the money came in at a much slower pace than it did in 1996-a record-setting year for hospitals. That year hospitals saw their aggregate profits jump nearly 25% to $21.3 billion, giving them an all-time-high profit margin of 6.7% (Jan. 12, 1998, p. 2).
The slight dip in the 1997 profit margin is the first drop since 1993, when it slipped to 4.2% from 4.5% a year earlier.
The enviable profit margin is due to cost cutting and containment by hospitals, said Richard Wade, the AHA's senior vice president for communications.
"We have been operating more efficiently," he said. "We're going to come to a point when we can't cut anymore."
The release of the new numbers comes at a politically sensitive time for the AHA and other hospital lobbying groups, which are trying to head off as much as $10 billion in Medicare spending reductions being considered by the White House (Jan. 4, p. 8). Record aggregate profits in 1997 and a nearly 16% profit margin on Medicare inpatient care projected for this year will make the job all that more tough in Washington.
However, Wade said the hospitals' profit margin will continue to drop because of the Medicare spending reductions mandated by the Balanced Budget Act of 1997.
Hospital revenues and expenses kept pace in 1997, each rising 4%. That compares with a 4% and 2.9% increase in revenues and expenses, respectively, in 1996.
Hospitals posted total net revenues of $327.6 billion and had expenses of $305.8 billion in 1997.
Net patient revenues increased 3.3% to $300.6 billion.
The AHA figures are based on data collected from the 5,057 acute-care hospitals that were operational in 1997. The number of hospitals declined 1.5% from 1996, when 5,134 hospitals were operating. The number of beds decreased 1% to 853,287 in 1997.
The hospital financial figures are part of the AHA's annual Hospital Statistics report, released last week.
The number of hospital admissions continued to climb in 1997, increasing 1.5% to 31.6 million. However, the average length of stay dropped to 6.1 days from 6.2 days in 1996.
Hospitals continue to increase their focus on outpatient care.
Total outpatient visits rose 2.3% to 450.1 million, and the number of outpatient surgeries increased 5% to 14.7 million.