The median operating margin of not-for-profit health systems rated by Standard & Poor's rose to 2.47% in 2004, compared with 1.72% in 2002, and their median overall profit margin was 4.28%, up from 1.6% in 2002. Even lower-rated systems gained financially, with three of 14 upgrades in 2004 affecting speculative-grade ratings. S&P did not publish system medians for 2003. The financial performance of standalone hospitals similarly improved, although S&P said systems were better positioned to weather challenges facing the industry. The median operating margin for standalone hospitals was 2.3% in 2004, compared with 1.9% in 2003, and their median overall profit margin climbed to 4.1%, from 2.9% in 2003. Industrywide gains reflected strong revenue growth driven by rate increases, solid patient volumes, good revenue cycle management, slower growth in malpractice premiums and reduced reliance on temporary labor, S&P said. Those positive changes offset higher bad debt expense in 2004, the ratings agency said. -- by Paul Barr
Not-for-profit hospitals' finances rebound in 2004: S&P
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