The American Hospital Association downplayed the effect that its tally of hospital financials might have on Capitol Hill, saying that despite the overall solid results, hospitals continue to lose money when they treat patients who are covered by Medicare and Medicaid.
General acute-care hospitals, in the aggregate, saw profits rise 22% to a record high of $35.2 billion, according to the AHA. And net revenue for the nations 4,927 general acute-care hospitals rose 7.8% last year, to $587.1 billion. Operating revenue growth held at 7.3%, to $551.8 billion, the AHA reported.
But Richard Pollack, executive vice president of advocacy and public policy at the AHA, said the data show that Medicare pays, on average, 9% less than the cost of delivering services, while Medicaid pays 15% less. Besides that, hospitals also took a whack in the inpatient prospective payment system rule, he said. Under the new rule, hospitals would see their annual inflationary update cut by 0.6% in 2008 and 0.9% in 2009. From a congressional standpoint, weve already taken a hit for this year and next, he said.
Still, Congress is famous for sniffing out money. The AHA numbers arrive as federal lawmakers are on the hunt for dollars to offset the cost of a wide-ranging Medicare bill that would, in part, include the costly physician reimbursement fix.
And while the news may be good for hospitals overall, the timing of the report couldnt be worse, according to Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute in Washington. Its tough to cry poverty after having a great year like that, Antos said.
The Medicare Payment Advisory Commission estimates that overall Medicare margins for hospitals this year will be negative 5.4%. Thats the sweet talk for lobbying, said Alexander Vachon, a Washington healthcare consultant. Then there is politics. Senate Finance needs money for the doc fix, but does (Chairman Max Baucus) want the AHA TPing his office on Halloween?