Negative Profit Margin Predicted for Nation's Hospitals - Industry Trend or Event

Health Management Technology, Dec, 1999

Profit margins for hospitals nationwide are predicted to drop from the current median level of just over 4 percent to below zero in 2002. Recent studies by HCIA, Inc., and Ernst & Young LLP indicate that the Balanced Budget Act (BBA) reimbursement cuts could leave a majority of hospitals in the red in just two years.

The impact of the reductions in Medicare payments attributable to the BBA may well be greater than Congress and the Administration have anticipated. The changes are based upon actual results reported by U.S. hospitals subsequent to the implementation of Year One BBA cuts. Complete study results are available online.

www.hcia.com

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