HANYS and AHA Analyses Show Weak Hospital Financial Performance in New York
12/28/2007 —

A recent HANYS analysis of hospital financial data found that more than half of the state’s hospitals lost money or recorded margins of less than 1% in 2006. A separate national study by the American Hospital Association (AHA) found that the average operating margin of New York’s hospitals ranked 49th in the nation in 2006, second only to Hawaii.

“Our health care system will not be able to keep pace with the evolution of medicine and patient care if the majority of our not-for-profit hospitals are losing money or are essentially living paycheck to paycheck,” HANYS’ President Daniel Sisto said. “The advances in technology and treatment options that are central to providing effective health care require continual investment. If hospitals can’t generate the revenues necessary to invest in those advances, then our health care system as a whole, and our ability to provide the best care possible, will fall behind.”

HANYS’ analysis found the average operating margin of the state’s hospitals was 0.9%, or $386 million statewide for 2006, which follows an eight-year trend of annual hospital losses totaling $2.4 billion.

Funding cuts enacted in early 2007, combined with the national economic and related Wall Street slowdown, strongly suggest that when updated data become available late next year, hospital margins will be found to have once again returned to the red in 2007.

Weak hospital margins and losses are primarily attributable to governmental and private insurance reimbursement rates that are artificially low and in some instances more than a decade out of date. Perennial federal and state funding cuts, along with workforce shortages and rising costs for everything from blood products to liability insurance also exacerbate ongoing revenue challenges facing hospital administrators. – William Van Slyke