Hospital and health system managers should take pride in the steadily improving financial fortunes of the provider sector.
By most accounts, provider organizations have suffered in recent years. Government reimbursement cutbacks, faulty physician strategies, public relations woes and misguided expansions into managed care left many hospitals and health systems on the financial ropes. The dismal market conditions also have produced a somber attitude among hospital administrators. Yes, it's been a downtrodden, grumpy bunch in the executive suite.
But once again providers are showcasing their strongest attribute. Resilience has helped hospitals overcome a constant barrage of stiff challenges, ranging from the evaporation of fee-for-service medicine to stingy managed-care contracts to Y2K.
Somehow, some way, the hospital industry has always been able to make the changes necessary to survive crises.
So, as healthcare lobbyists continue to scramble for more reimbursement crumbs to help offset the sting of Medicare spending-growth caps enacted under the Balanced Budget Act of 1997, hospital administrators should cheer up. Take heed that:
* Standard & Poor's says that hospital operating margins are beginning to recover. The ratings agency expects even better results in 2001.
* Ascension Health, the nation's largest private not-for-profit healthcare system, reported boffo results in its first fiscal year.
* Centura Health, a Colorado system jointly sponsored by Catholic Health Initiatives and PorterCare Adventist Health System, lost $33.1 million in fiscal 1999. In fiscal 2000, ended June 30, the 10-hospital system generated net income of $56.1 million.
* Investor-owned hospital chains have staged significant financial rallies. HCA-The Healthcare Co., Tenet Healthcare Corp. and most of the smaller publicly owned hospital companies have avoided or overcome the costly mistakes of not-for-profit providers. As this week's cover story shows, even Wall Street has taken notice. Analysts are bullish, and investors are turning to hospital stocks as a safe haven in an uncertain market.
The upturn will not last forever, but those who earn their living managing hospitals need to remember that the glass is at least half full.