Hospital profits shoot upward between Q3 '08 and Q2 '09

Median hospital profits have climbed dramatically since the third quarter of 2008, an increase which cuts across all types of facilities, according to a new analysis of hospital financial performance by research firm Thomson Reuters.

Thomson Reuters looked at 24 key financial indicators for hospitals, analyzing both proprietary and public data to draw conclusions about more than 400 hospitals. Indicators included revenue and profit trends, days cash on hand and case mix.

The firm's researchers concluded that median hospital profits climbed from 0.37 percent for the third quarter of 2008 to more than 8 percent in the second quarter of 2009. Just as encouraging, they found that the industry's financial recovery cut across all classes of facility, including small, medium and large hospitals, as well as academic centers.

Not only are median profits up, median cash on hand increased from 90 days in Q1 '09 to 146 days in Q2 '09, which is actually higher than historical averages. Meanwhile, labor costs were down about 2.25 percent for the same period.

Despite the good news, all is not well in hospital land. Roughly 20 percent of hospitals had negative total margins during the period ending in Q2 '09, similar to the percentage seen prior to late 2007 when the recession hit.

To learn more about this research:
- read this Thomson Reuters press release
- read the full report

Related Articles:
Standard & Poor's: Non-profit hospital finances worsened in '08
Mass. hospital profits double since 2004
New Jersey hospitals in trouble, trade group says

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