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Recession easing for U.S. hospitals, study finds
2009-08-19
WASHINGTON (Reuters) - The recession appears to be easing for U.S. hospitals, although close to a third of hospitals remain in the red, according to a study published on Wednesday. The median profit margin of U.S. hospitals rose from 0.17 percent in the third quarter of 2008 to 3.1 percent in the first quarter of 2009, the analysis from Thomson Reuters found. All classes and sizes of hospitals, including large community hospitals and teaching hospitals, had better margins, the study found. "The financial situation has improved dramatically for U.S. hospitals," said Gary Pickens, chief research officer for the Healthcare & Science business of Thomson Reuters. "When we published our first analysis of hospital economic health in the fall of 2008, hospitals were facing unprecedented economic stress and staring down a real crisis," Pickens added in a statement. "Through a combination of aggressive cost controls and overall improvement in the economy, we're beginning to see a recovery, but it will be critical to watch these metrics to make sure that recovery is sustainable." Pickens and colleagues tracked 24 key financial indicators of more than 400 hospitals, looking at revenue and profit, employment, closures, inpatient volume, days cash on hand and charity expenses. They found: * Median total margins were near zero in the third quarter of 2008. In the first quarter of 2009, all classes of hospitals had positive operating margins, reaching an average of 3.1 percent. * 30 percent of hospitals still had negative profit margins, improved from 50 percent in the third quarter of 2008. * Liquidity is steady, with hospitals having a median 90 days cash on hand at the beginning of this year. * More than 90 percent of licensed beds were being used in a typical hospital, holding steady since 2005. * Hospitals have cut labor costs by 3 percent year-over-year, while non-labor-related expenses have decreased by approximately 2 percent year-over-year. Thomson Reuters is the parent company of the Reuters news agency. (Editing by Todd Eastham)
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