Report estimates 15.9% hospital margins in 1998

Hospital pretax profits on overnight care for Medicare patients will rise to 15.9% this year even with a freeze in program payments, according to a report by a congressional advisory panel.

The Medicare Payment Advisory Commission in Washington had previously estimated that pretax profit margins would fall to 12.6% in 1998 from 14.2% in 1997.

It revised its estimate after new data showed that hospitals are doing better than previously realized at controlling how much they spend on each patient. Hospital costs per patient for overnight care fell in 1997 for the first time in many years, the report says.

For all hospitals, costs per patient for overnight care fell 2% in 1997 compared with an increase of 2% in 1996, according to the advisory panel's report. Costs per patient rose 0.6% for the first two months of 1998, the report says.