Managed Care Contracts Helped Drive Down Hospital Profits, Study Finds
Managed care contracts helped drive down hospital profits during the 1990s, particularly among teaching hospitals, according to a new study, the Boston Herald reports. Gary Young of the Boston University School of Public Health examined the profits made by 200 Florida hospitals on patients covered by HMOs from 1990 to 1997. He found that by 1997, about 50% of the hospitals were losing money on their HMO contracts. In addition, teaching hospitals had profit margins that were 11% to 14% lower, on average, than their nonacademic counterparts. The study will "bolster the teaching hospitals' argument" that they do worse under managed care contracts, Young said. "Everyone knew teaching hospitals had higher costs, but it was unclear (before this) whether they got high enough prices to offset the higher costs," he added. Young said the results from Florida, which he used because of its financial reporting requirements, likely apply to other states with a strong HMO presence. He said that since 1997, many hospitals have increased their profits by banding together to gain more leverage over managed care companies but that his study does not reflect that trend (Chesto, Boston Herald, 6/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.