Hospitals came out of the recession with generally solid margins, even as the anemic economy left more households uninsured and health spending slowed so significantly the sluggish growth set a record. I have noted in prior posts that hospitals held onto margins by sharp cuts to spending, including layoffs or reduced services in some cases, to keep pace with flagging revenue.
Healthy margins in Pennsylvania
Early results for fiscal 2010 show hospitals' strong performance continued. In Pennsylvania, the state's hospitals reported a pointed rise in operating income, according to figures released by the Pennsylvania Health Care Cost Containment Council.
On average, hospitals in Pennsylvania reported an operating margin of 4.36% last year—the second-highest average in 15 years, exceeded only by 4.82% in 2007, according to the Cost Containment Council's figures.
Operating expenses increased more slowly than revenue at 2.8% and 3.7%, respectively, the agency reported.
Hospitals cared for fewer patients, as the number of those who were discharged dropped to 1.75 million from 1.79 million the prior year and 1.83 million the year before that.
Net margins, a figure that includes investment income, sharply rebounded last year. Some hospitals ended the fiscal year in June and others in December or another month, depending on the hospital. The average Pennsylvania hospital net margin soared in 2007 to 6.56% and plunged with the credit crisis and recession to 2.03% for fiscal 2009. Last year, the figure spiked to 5.26%.
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