To hear some hospital managers tell it, their facilities have been on the brink of financial disaster since the day they opened. The often-cited sources of financial calamity are Medicare, Medicaid, managed care and the uninsured.
But hospitals and the executives who lead them have somehow been more than able to weather whatever storm comes their way-that is, at least through 1997, the latest data show.
Fewer hospitals are making more money and are spending less of it on the poor, according to figures from the American Hospital Association.
This section of By the Numbers reveals that:
* While the overall size of the hospital industry is shrinking, the industry is not in a free fall. The number of acute-care hospitals dipped less than 2% in 1997 to 5,057.
* The number of hospitals that stop providing acute-care services each year has been relatively consistent since 1995, according to figures from HHS' inspector general's office.
* As a group, hospitals posted a record $21.9 billion in aggregate profits in 1997. That equated to a 6.6% profit margin-the second-highest margin ever recorded by the AHA.
* Hospitals' uncompensated-care burden has changed little in the past decade. In 1997, hospitals collectively spent $18.5 billion on uncompensated care, which is the combination of charity care and bad debt. That equaled 6% of total hospital expenses that year, which was the lowest percentage devoted to the poor since 1993, when hospitals also spent 6% of their money on uncompensated care.
The relatively bright financial picture makes it more difficult for lobbyists to seek relief from the Balanced Budget Act of 1997. Are hospitals really in trouble this time? Led by the AHA, the hospital industry says this time, it's true.
A Lewin Group report released in May said the Medicare spending restraints included in the budget law will reduce Medicare payments to hospitals by $71 billion over five years, or one-third more than originally projected when the law was passed.
Such a large reduction in payments from hospitals' largest single payer is leading to cutbacks in services and personnel, hospital lobbyists are telling Washington lawmakers. Consequently, the AHA and other provider groups affected by budget-law-mandated Medicare payment changes are pushing a host of financial relief bills in Congress.
One sign that things may not, in fact, be so rosy in the hospital industry: In 1998, the turnover rate of hospital chief executive officers hit 16.9%-the highest turnover rate in the past 10 years.