Report: Calif. Hospitals’ Total, Operating Margins Increased in 2010
The median total and operating margins for California hospitals were higher in 2010 than they were in the previous nine years, according to a report released last month by the California HealthCare Foundation, Healthcare Finance News reports.
CHCF publishes California Healthline.
The report found that the median total margin for state hospitals was 5.1% in 2010, while the median operating margin was 3.1%.
However, hospitals' charity care and bad debt increased by 50% from 2001 to $2.4 billion in 2010, according to the report. It also found that visits to emergency departments increased by 12% over the same period, while the number of beds decreased.
Bump From Provider Tax
Anne McLeod -- senior vice president of health policy for the California Hospital Association -- said that although findings show that hospitals' total and operating margins have increased from previous years, their revenue and income were inflated because of a health care provider tax in 2010, which increased Medicaid matching funds that hospitals received from the federal government.
A Look Ahead
McLeod said population growth will present challenges for state hospitals in coming years. She said that most of the state's population growth over the next few years will include people age 55 and over, which "comes with the likelihood of more chronic disease."
According to McLeod, changes under the Affordable Care Act also could have a negative effect on state hospitals. She said that a Medicaid expansion under the ACA could send more beneficiaries to hospitals, suggesting they could be treating more patients with lower reimbursements than what private insurers pay. This could occur at the same time as the implementation of nearly $22 billion in Medicare payment cuts under the ACA, according to McLeod.
However, Maribeth Shannon -- director of the Market and Policy Monitor program at CHCF -- said that hospitals are considering innovative ways to reduce costs, such as by using telehealth tools and reducing servicesÂ that are less profitableÂ or low volumeÂ (Worth, Healthcare Finance News, 2/18).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.