Solucient Study: Hospital Operating Margins Show Negligible Increase In 2000 -- Profit Levels 'Not Sustainable Longer Term'

-- Small hospitals fared their best since 1997

-- Western regions hit hardest; Eastern hospitals fare best



Apr 23, 2001, 01:00 ET from Solucient

    EVANSTON, Ill., April 23 /PRNewswire Interactive News Release/ --
 Operating profit margins at U.S. hospitals flattened at an annualized average
 of 3.69 percent in 2000, indicating only a slim degree of financial health.
 In a report released today from Solucient, the health care industry's leading
 provider of strategic intelligence and benchmark information, hospital
 operating margins increased a scant .41 percent over 1999 and remained
 relatively low, a full 36.6 percent lower than in 1997.
     "A margin of only 3 percent or 4 percent really isn't sustainable longer
 term, especially in the face of spiraling drug costs and continued pressure
 from hospital labor shortages," said Solucient President and Vice Chairman
 Gregg Bennett.  "Additionally, hospitals are still feeling the sting of the
 Balanced Budget Act of 1997 and its clamp on Medicare reimbursement."
     Other key findings from the study, "The Health of Our Nation's Hospitals":
      -- All three size segments -- hospitals with less than 150 beds, those
         with 150 to 299 beds, and those larger than 300 beds -- showed only
         slight operating margin increases this year over last.
      -- Smaller hospitals finished the year best at 4.84 percent -- their
         highest operating margin since 1997.
      -- Larger hospitals produced slimmest operating margins at 2.83 percent.
      -- Regionally, Western hospitals posted the weakest operating
         margins -- 3.93 percent.
      -- Northeastern hospitals fared the best, going from break-even in 1999
         to almost 5 percent in 2000.
 
     "It will be interesting to note if last year's flattening continues in
 2001," Bennett adds.  "Many hospitals have invested in performance improvement
 activities as a result of BBA pressure.  The growth of this study's database,
 which hospitals use primarily to track success of such activities, supports
 the trend.  If performance improvement activities are succeeding, then we'd
 hope to see a larger increase in the industry's operating margins in 2001."
     "The Health of Our Nation's Hospitals" is among the industry's first
 studies this year to include complete data for 2000.  Solucient releases these
 reports semiannually, tracking data from hospitals nationwide that report
 quarterly financial and operational data to Solucient's HBSI ACTION(TM), an
 outcomes management system.  This growing group of more than 600 major
 teaching medical centers, multi-hospital systems and medium and small
 community hospitals, is representative of the U.S. market.  The Average
 Operating Margin Percent is a profitability ratio that measures the percent of
 revenue generated from patient care services that remains after all related
 expenses are accounted for.  In the study, Operating Margin is calculated as
 the difference between total operating revenue and total operating expense
 divided by total revenue.
     Solucient powers health care decision-making.  With the largest repository
 of health care intelligence and benchmark information, Solucient supplies
 providers, payers, consultants, employers and pharmaceutical companies with
 access to comprehensive, results-oriented information to grow their business,
 contain costs and deliver quality care.  Solucient delivers strategic
 clinical, operational, financial, planning and marketing information resulting
 in improved health care business and clinical outcomes.  Solucient's robust
 information helps benchmark performance across the continuum of care.  For
 more information, visit: www.solucient.com .
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X43792615
 
 

SOURCE Solucient
    EVANSTON, Ill., April 23 /PRNewswire Interactive News Release/ --
 Operating profit margins at U.S. hospitals flattened at an annualized average
 of 3.69 percent in 2000, indicating only a slim degree of financial health.
 In a report released today from Solucient, the health care industry's leading
 provider of strategic intelligence and benchmark information, hospital
 operating margins increased a scant .41 percent over 1999 and remained
 relatively low, a full 36.6 percent lower than in 1997.
     "A margin of only 3 percent or 4 percent really isn't sustainable longer
 term, especially in the face of spiraling drug costs and continued pressure
 from hospital labor shortages," said Solucient President and Vice Chairman
 Gregg Bennett.  "Additionally, hospitals are still feeling the sting of the
 Balanced Budget Act of 1997 and its clamp on Medicare reimbursement."
     Other key findings from the study, "The Health of Our Nation's Hospitals":
      -- All three size segments -- hospitals with less than 150 beds, those
         with 150 to 299 beds, and those larger than 300 beds -- showed only
         slight operating margin increases this year over last.
      -- Smaller hospitals finished the year best at 4.84 percent -- their
         highest operating margin since 1997.
      -- Larger hospitals produced slimmest operating margins at 2.83 percent.
      -- Regionally, Western hospitals posted the weakest operating
         margins -- 3.93 percent.
      -- Northeastern hospitals fared the best, going from break-even in 1999
         to almost 5 percent in 2000.
 
     "It will be interesting to note if last year's flattening continues in
 2001," Bennett adds.  "Many hospitals have invested in performance improvement
 activities as a result of BBA pressure.  The growth of this study's database,
 which hospitals use primarily to track success of such activities, supports
 the trend.  If performance improvement activities are succeeding, then we'd
 hope to see a larger increase in the industry's operating margins in 2001."
     "The Health of Our Nation's Hospitals" is among the industry's first
 studies this year to include complete data for 2000.  Solucient releases these
 reports semiannually, tracking data from hospitals nationwide that report
 quarterly financial and operational data to Solucient's HBSI ACTION(TM), an
 outcomes management system.  This growing group of more than 600 major
 teaching medical centers, multi-hospital systems and medium and small
 community hospitals, is representative of the U.S. market.  The Average
 Operating Margin Percent is a profitability ratio that measures the percent of
 revenue generated from patient care services that remains after all related
 expenses are accounted for.  In the study, Operating Margin is calculated as
 the difference between total operating revenue and total operating expense
 divided by total revenue.
     Solucient powers health care decision-making.  With the largest repository
 of health care intelligence and benchmark information, Solucient supplies
 providers, payers, consultants, employers and pharmaceutical companies with
 access to comprehensive, results-oriented information to grow their business,
 contain costs and deliver quality care.  Solucient delivers strategic
 clinical, operational, financial, planning and marketing information resulting
 in improved health care business and clinical outcomes.  Solucient's robust
 information helps benchmark performance across the continuum of care.  For
 more information, visit: www.solucient.com .
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X43792615
 
 SOURCE  Solucient