U.S. hospitals saw profit margin of 5% in '09

Tying 25-year averages despite a punishing recession, U.S. community hospitals in 2009 posted a 5% profit margin in fiscal 2009, shows a Modern Healthcare analysis of industrywide statistics released by the American Hospital Association.

The nation's 5,008 community hospitals earned $34.4 billion in profits on $691 billion in net revenue in 2009, improving their financial fortunes as decreases in expense growth more than made up for a slowing in patient revenue growth, according to the figures contained in the most recent AHA Hospital Statistics guide, released Tuesday.

The 5% profit margin in 2009 exceeded the 25-year industry average by a few hundredths of a percent, a year-by-year review of annual AHA figures shows. The results, which consist of self-reported fiscal 2009 performance for U.S. community hospitals, come despite widespread fears among hospital and health system about the economic fallout from the worst recession in decades.

The statistics show that hospitals took a hard line toward expenses in 2009, slowing the growth of expenditures to 4.7%, compared to the 25-year average of 6.9% annual growth. Meanwhile, patient revenue grew by 5.9% that year, which also was lower than the 25-year average of 7%.

Investments, which had been a major source of revenue for hospitals and systems until the recession made them a liability, returned to positive territory in 2009. The industry posted $4.4 billion in nonoperating revenues, compared with a $4.4 billion loss in 2008, and a record-breaking $17 billion investment profit in 2007.