Northeast region and larger hospitals principal victims of dropping operating margins in U.S.

Bellevue 08 May 2000HBS International Inc. (HBSI), provider of outcomes-management systems to the health care industry, has found that the hospital operating margins dropped by 47 percent in the last three years, from 6.1 percent in 1997 to 3.2 percent in 1999. This information has been released in


The Health of Our Nation's Hospitals: A Report on Operating Margins, a bi-annual report which tracks hospital operating margin trends.

"Although we've watched this trend develop now for three years", comments Gregg Bennett, who is president and CEO of HBSI, "common sense tells us it cannot continue. Unfortunately, the trend will abate only because expenses will be cut. Frankly, I do not see revenues increasing. Consequently, hospitals are faced with performing either well planned, but time and resource consuming surgical strikes, or immediate across-the-board cuts."

The Health of Our Nation's Hospitals also indicates that there is an inverse relationship between hospital size and average operating margin in 1999. It are the largest hospitals that demonstrated the most drastic fall in operating margins, from 6.02 percent in 1997 to 2.69 percent in 1999, whereas the smallest hospitals only dropped from 5.60 percent in 1997 to 4.19 percent in 1999. Regionally, the Northeast is being hit hardest with a drop in overall operating margin from 3.35 percent in 1997 to virtually nothing in 1999. Conversely, the South Atlantic region, operating at a 5.58 percent margin in 1997, appears to have the best average operating margin in 1999 at 4.42 percent.

The data used in The Health of Our Nation's Hospitals bi-annual report have been collected from hospitals which submit quarterly financial and operational data to HBSI via HBSI ACTION, an outcomes management system which leverages the largest operational database in the health care industry. Hospitals that submit data used in the report are geographically representative of the U.S. and range in bed size from fewer than 100 beds to more than 600. Hospitals, multi-hospital systems, academic medical centres and teaching facilities are among the hundreds of health care organisations using HBSI ACTION to identify opportunities for cost savings, monitor over time operational performance, and also target better performing hospitals for comparison.

For more detailed information about the contents of The Health of Our Nation's Hospitals, or to receive a copy of the report, you can contact Jamie Gier, the HBSI marketing communications manager, who also can be reached by phone at +1-800-290-8982, extension 134. HBSI is a recognised leader in aggregating, warehousing and analysing health care process and outcomes information. Over 900 health care facilities nationwide use the outcomes information to improve financial viability, operational efficiencies, clinical effectiveness and patient satisfaction.

Leslie Versweyveld

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