Freshly issued HBSI bi-annual report shows hospital operating margins still declining

Bellevue 23 November 1999Just recently the HBS International Company, as a major provider of outcomes-management systems to the health care industry, has released a bi-annual report that tracks hospital operating margin trends in the United States. The report, "The Health of Our Nation's Hospitals: A Report on Operating Margins", reveals that profit margin averages are continuing to decline. In fact, second quarter 1999 operating margins have dropped by 50 percent compared to the same period in 1997, shrinking from 6.22% to 3.11%.

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"We've been hoping to see improvements in these hospitals' financial situations", said Gregg Bennett, president and CEO of HBSI. "When we realised that the downward trend in hospital margins that we first noticed in 1997 was continuing, we decided to take a closer look and make this information available as a resource."

Hospitals which have submitted data used in the report, are geographically representative of the United States, and range in bed size from fewer than 100 beds to more than 600. The HBSI company's "The Health of Our Nation's Hospitals" bi-annual report indicates that there exists an inverse relationship between hospital size and the average operating margin in second quarter 1999. The largest hospitals showed the smallest average operating margin (2.6 percent), while the smallest hospitals averaged the largest operating margin (4.9 percent).

In addition to examining the relationship between hospital size and operating margins, HBS International's report looks at the occupancy rates and time in accounts receivable. In second quarter 1999, the average occupancy percent rose by 4% compared to second quarter 1997. In turn, the average days in patient accounts receivable showed a 15% increase in second quarter 1999 as compared to the same period in 1997.

The data, used in "The Health of Our Nation's Hospitals" report were collected from hospitals which have submitted quarterly financial and operational data to the company via HBSI ACTION, a system for outcomes-management which leverages the largest operational database in the health care industry. Hospitals, multi-hospital systems, academic medical centres and teaching facilities are among the hundreds of health care organisations using HBSI ACTION to identify the opportunities for cost savings, monitor operational performance over time, as well as to target the better performing hospitals for comparison.

HBSI provides outcomes-management systems to more than 900 health care facilities all over the nation. HBSI company's suite of systems and services allow health care organisations to improve operational efficiency; increase clinical, financial and resource performance; strengthen their competitive position; enhance patient functional status; heighten patient satisfaction; and monitor home health. More information about the HBSI ACTION system is available in VMW's August 1999 article HBSI and the Picker Institute to integrate operational cost and patient satisfaction information.


Leslie Versweyveld

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