The data are in, and they are not pretty: Hospitals are reporting negative profit margins for the third quarter of 2008, reversing a trend of healthy profitability from this time last year.
A rapid response survey released by the American Hospital Association concluded that hospitals posted negative profit margins of 1.6% in the quarter ended Sept. 30. Last year, hospitals concluded the same quarter with a positive 6.1% margin, according to the survey. The report was based on data gathered from 736 hospitals in 30 states that responded to the AHAs questionnaire.
The downturn has left more than half of the survey respondents pondering staff reductions, while more than a quarter of the hospitals are deciding whether to reduce services. The financial pinch comes amid falling revenue, declining admissions and negative investment earnings, even as experts predict that high unemployment will lead to more patients seeking uncompensated care at emergency rooms.
AHA officials used the findings to bolster their pleas to lawmakers in state and federal governments not to decrease Medicaid and Medicare payments. On Nov. 13, the association urged lawmakers in Washington to approve a temporary increase in the federal medical assistance percentage, similar to the $10 billion boost Congress approved in response to the 2001 downturn. -- by Joe Carlson