Operating a not-for-profit hospital was a little better than a break-even business last year.
A new report from Moody's Investors Service found that the median operating profit of not-for-profit hospitals was $652,000 in 1999, down from a high during the past five years of almost $4 million in 1997. Hospitals' median operating profit in 1998 was more that $1.9 million.
"We're missing a comma or something," said Lisa Goldstein, one of the report's authors and a Moody's vice president. "I think it's just indicative of the financial stress the not-for-profits are going through for a host of reasons."
Integration problems, labor issues, reductions in federal reimbursement and rising pharmaceutical costs are among the reasons for the drop in operating profit, according to the report.
The operating profit decline came despite an increase in net patient revenue. Median patient revenue rose to $144.5 million in 1999 from $135.2 million the previous year.
The report, released last week, is based on audited financial statements from 320 not-for-profit hospitals.
"This is another report that's placed now on a mountain of evidence that shows the financial stress the field is under," said Carmela Coyle, senior vice president for policy at the American Hospital Association.
The Moody's report found that 138, or 43% of the not-for-profit hospitals, in its sample reported an operating loss in 1999. Two years earlier, only 55 providers, or 17% of the 320 hospitals, reported such a loss.
When nonoperating revenue is included the median total profit for hospitals was $4.4 million in 1999, down from a high of $8.8 million in 1997.