For Profit Hospitals Doing Better in Bad Economy

Some interesting statistics were announced at last week at the annual South Florida Summit. Caroline Rossi Steinber, a trends specialist with the American Hospital Association (AHA), shared the following information with attendees:

90% of surveyed hospitals have made cutbacks as a result of the tough economic times, with the biggest cuts in administrative expenses.

43% of surveyed hospitals had a negative net return for the first quarter, which was 17% higher than the same time last year

65% of hospitals reported that they witnessesed an increase in the number of physicians seeking employment

In addition, according to Darren P. Lehrich, Deutsche Bank’s managing director of healthcare providers research, for profit hospitals’ stocks have increased 70% in the past three months. Moreoever, the profit margins for publicly traded hospitals during the quarter were the highest they’ve been in a number of years.

A big concern for hospitals across the U.S. is how the concept of public health insurance will be interpreted and enforced in the future.

The AHA’s studies show that most hospitals are relying on current government payers like Medicare and Medicaid, whose combined brings in 56% of the revenue, while private insurance accounts for 43% of revenue.

Steinberg noted that providers depend heavily on private insurance providers to pay the bills because Medicaid only reimburses 90% of their costs and private insurance generally reimburses 130%. If the public health insurance is specified as a health insurance option for the uninsured, it would help hospitals immensely by reducing the uncompensated care. On the other hand, if public health insurance is used as a “cheap public plan open to everybody an reimbursed providers at low rates,” it would be devastating to the hospital industry.

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