Pennsylvania hospitals were more profitable in 1997 than in 1996, according to a report released last week by an independent state agency.
Hospital industry representatives there said the data are too old and paint an unrealistic picture of hospitals' finances.
The situation mirrors one in New York, where hospital executives have criticized a recent state health department report that said New York hospitals enjoyed record profits in 1997 (March 15, p. 44).
In Pennsylvania, hospitals' aggregate overall total profit margin rose to 4.2% in 1997 from 3.9% in 1996, said the report from the Pennsylvania Health Care Cost Containment Council. The figures are based on data from 201 acute-care hospitals.
The 50 most profitable hospitals in the state had an average margin of 7.3% in 1997, up from 6.8% in 1996. Over the same period, 35 hospitals lost money, with six accounting for 83% of the $194 million in losses.
The report noted that Medicare payments rose 1% during 1997 but acknowledged that revenues and Medicare payments "are anticipated to fall as a result of the Balanced Budget Act" enacted that year.
A more recent analysis shows a financial slowdown has already begun.
The report, based on fiscal 1998 data compiled by the Hospital and Healthsystem Association of Pennsylvania, showed that 59% of hospitals in the state reported a drop in net income from 1997.
"Total margins for many hospitals have been bolstered by returns from a strong stock market," Carolyn Scanlan, the association's president and chief executive officer said. "These returns can be misleading and in fact fleeting should the stock market decline."