A tight grip on expenses helped improve solo hospital operating margins in 2009, Standard & Poor's said in a newly released report. The New York ratings agency said median hospital operating margins largely improved from 2008, though A-rated hospitals saw no change. The median operating margin in 2009 for the more than 550 hospitals included in the analysis was 2.3% compared with 1.8% in 2008 and 2.5% in 2007.
S&P sees improvement in median operating margins
Hospitals also reduced capital spending to hold onto cash, the ratings agency said.
Despite weaker demand for hospital services and more patients unable to pay for medical care, many hospitals saw the median net patient service revenue increase. Hospitals adopted strategies to curb spending—such as freezing salaries and benefits—and to increase payments from private insurers, the report said.
Investment gains in 2009 helped to bolster balance sheets, though 70% of hospitals in the analysis closed their books in September or earlier, the report said. The Dow Jones industrial average reached a 12-year low in March 2009. The Standard & Poor's report said hospitals that ended the fiscal year earlier in 2009 did not see the same gains as those that closed the year in December. Median excess margins—net income divided by net revenue, which includes investments—was 2.4% in 2009 compared with 3% in 2008. Among hospitals with fiscal years that end in December, the median excess margin in 2009 was 3.4% in 2009 and 1.2% in 2008.
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