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Fourth-quarter 1998 hospital operating margins dropped by 45% compared to the same period in 1997, according to an analysis by HBS Interna tional (HBSI), a Bellevue, WA-based health care outcomes management company.
Data used for the analysis came from 437 hospitals that have an extended history of reporting quarterly financial and operational data to HBSI.
For full-year 1998, the profit margins of the reporting hospitals (the majority of which are nonprofit) decreased by 24% from the year before, said Greg Bennett, president and CEO of HBSI, in a prepared statement. HBSI’s analysis also showed that 27% of the hospitals had negative operating margins in the fourth quarter of 1998.
The nation’s largest hospitals experienced the most sizable declines. Fourth-quarter operating margins for hospitals with 300 or more beds dropped 51% compared to the same period in 1997, while hospitals with 100 to 299 beds showed a 45% decline and hospitals with 99 or fewer beds had a decline of 31%.
The area showing the greatest decline was the Southeast Central region (Alabama, Kentucky, Mississippi, and Tennessee), with the average margin plummeting 117% — from 3.77% in fourth quarter 1997 to -0.66% in the fourth quarter of 1998.
The downward trend in margins was consistent across all regions with the exception of the South Atlantic region (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia), which showed a slight increase of 3.4%.