Hospital’s Profit Margins Hit 6 Year High in 2004

From USA Today:

The nation’s hospitals, boosted by a slowdown in expense growth and continued ability to drive a hard bargain with insurers, posted profit margins that reached a six-year high in 2004 — and indications are that 2005 was just as good.
The hospital industry is in the midst of its biggest construction boom in 50 years, spending nearly $100 billion in inflation-adjusted dollars in the past five years for new and expanded facilities nationwide, often in rapidly growing suburban areas.

That spending comes as conditions have been good for both borrowing and spending. Hospitals reported an average 5.2% profit margin in 2004, the last full year of data available from the American Hospital Association.

In addition to strong bargaining power and slowing expenses, profits were also driven by investment income from an improving stock market, says the association’s Rick Wade. Even so, Wade says the good times are not shared by all.

“About 25% of hospitals are in the red,” Wade says, down from about a third in the past few years.

Hopsital Building Boom

From USA Today:

The USA is in the middle of the biggest hospital-construction boom in a half-century, a development expected to increase the use of high-tech medicine and add fuel to rising health care costs.

The hospital industry has spent nearly $100 billion in inflation-adjusted dollars in the past five years on new facilities, up 47% from the previous five years, according to the Census Bureau. Spending was likely to reach a record $23.7 billion in 2005.

“We are replacing a generation of hospitals that are obsolete,” says Kirk Hamilton, a hospital architect who teaches at Texas A&M University.
New hospitals don’t mean more beds: Capacity fell to 808,000 beds in 2004, down 18,000 from 2001.

The money is being spent on more luxurious buildings packed with advanced equipment. The hospitals focus on profitable treatments such as heart surgery and neonatal care that are reimbursed at higher rates by private insurance and Medicare

Florida "ER Crisis"

From the Palm Beach Post:

A statewide health task force on Wednesday confirmed what people in Palm Beach County and Treasure Coast have known for several years: The wait in hospital emergency departments in Florida has grown excruciatingly long, and patients aren’t always getting the care they need.

“Florida is facing a crisis in providing emergency care to the citizens in Florida,” according to the 120-page report from the group of hospital executives, health insurance officials, state regulators, doctors and emergency medical services personnel.

At its core, the problem is a simple supply-and-demand issue: As the number of patients seeking care in hospital emergency departments has soared with the state’s population growth, the number of doctors working in emergency rooms has shrunk. Florida doctors have fled the emergency room mostly because of their perceived increased risk of being sued and worries about not collecting payment from uninsured patients.