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.

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