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Pa. hospital finances improve

NEWS IN BRIEF — Posted April 3, 2006

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A new report examining the financial health of hospitals in Pennsylvania has found that total income margins increased more than a full percentage point from 2004 to 2005, reflecting evidence that the outlook for hospitals nationwide has modestly improved.

The Pennsylvania Health Care Cost Containment Council examined the state's 176 general acute care hospitals and calculated that total margins increased from 3.2% in fiscal 2004 to 4.6% in fiscal 2005.

"The primary reason for that was a large increase in net patient revenue -- what hospitals are paid by third-party payers in the public and private sector," said Joe Martin, a spokesman for the agency.

Marc P. Volavka, the cost containment council's executive director, said the report was positive news overall. "However, it should still be a concern that 27% of Pennsylvania hospitals are losing money," he said.

The American Hospital Assn. has estimated nearly one-third of the nation's hospitals are losing money, and more could be headed in that direction as they grapple with aging facilities, increasing technology demands and rising numbers of patients unable to pay.

Pennsylvania's figures are in line with national statistics showing small gains in the financial health of hospitals. A recent report from the ratings agency Standard & Poor's found nonprofit hospitals saw several financial benchmarks improve last year, including an increase in average operating margins from 1.9% in 2004 to 2.3% in 2005.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2006/04/03/bibf0403.htm.

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