Hold­ing steady

Op­er­at­ing mar­gins same, with over­all in­crease

Modern Healthcare - - The Week In Healthcare - Ashok Sel­vam

De­spite the chal­lenge of softer pa­tient vol­ume, not-for-profit hos­pi­tals and health sys­tems main­tained their op­er­at­ing mar­gins and im­proved their over­all mar­gins in fis­cal 2010, ac­cord­ing to me­dian fi­nan­cial fig­ures re­leased last week by Stan­dard & Poor’s.

Me­dian net mar­gins for stand­alone hos­pi­tals and health­care sys­tems rose to 4% last year from 2.4%. That bodes well for the short term, but S&P of­fi­cials ex­pect rev­enue growth to con­tinue to slow.

“Providers are go­ing to have a harder and harder time off­set­ting what is an in­creas­ingly hos­tile en­vi­ron­ment,” said Martin Ar­rick, a man­ag­ing di­rec­tor in S&P’s Pub­lic Fi­nance Rat­ings Group.

Op­er­a­tional mar­gins re­mained at 2.3%, al­most iden­ti­cal to fis­cal 2009. That trend will also con­tinue for the next cou­ple of years, Ar­rick added. “Mar­gins will be squeezed, and I think providers will work very hard to main­tain the mar­gins they have and the rate of de­cline for the best sys­tems will ei­ther be not at all or very slow,” he said. “But for those hav­ing a harder time, it will ac­cel­er­ate.”

The earn­ings be­fore in­ter­est, de­pre­ci­a­tion and amor­ti­za­tion num­bers also stood out at ev­ery level. While not reach­ing the heights of fis­cal 2000, the EBIDA fig­ures saw a sharp rise from last year, S&P an­a­lyst Jessica Gold­man pointed out. S&P cred­ited bet­ter non­op­er­at­ing in­come and sta­ble op­er­at­ing earn­ings for the in­crease. That re­peats a

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.