MEDICARE: 60% of Hospitals Will Lose Money on Program
Nearly 60% of hospitals will lose money on Medicare patients by the end of 2004, as continued federal cutbacks and rapid growth in the cost of care threaten the financial stability of the hospital industry, according to a study released yesterday by the American Hospital Association at its annual meeting in Washington, D.C. The study, completed by the Lewin Group, projected an average profit margin of -6.6% on Medicare patients -- a slightly better outlook than a similar study released in 1999 because it accounts for about $8 billion in relief provided by last year's BBA refinement act (Zitner, Boston Globe, 2/2). But the study shows the relief act boosted hospitals' total Medicare payments by only 1%, and AHA officials vow to continue their campaign to restore Medicare funds (AHA release, 2/1). AHA's legislative agenda includes the following:
- Increased payments to teaching hospitals for physician training (Boston Globe, 2/2);
- A "cost of caring" adjustment that would increase annual inflation adjustments for Medicare payments to help hospitals keep pace with rising health care costs;
- Reduced cuts in disproportionate share hospital (DSH) payments (AHA release, 2/1);