New Data from AHA Suggest Stronger Hospital Margins, But Negative Outlook Prevails for 2014

The American Hospital Association released its annual Hospital Statistics guide last week and some of its findings suggest a resilient, quickly adapting hospital industry through fiscal year 2012, according to Modern which reported on select information from the guide.


The guide’s data highlight yet another disconnect among the various organizations that both report on and predict hospital health. While AHA’s retrospective data show stronger hospital margins in 2012, predictions for 2014 by industry analysts focus on the opposite.


2014 Outlook

AHA’s retrospective data from 2012 indicates an industry in a stronger position than industry experts had thought. But projections for 2014 from those experts are less encouraging. Modern Healthcare presented its 2014 outlook for hospitals and noted uncertainty about patient volumes and operating margins: “It’s uncertain whether hospitals will continue to see stagnation in the volume of patients in 2014, forcing them to find other ways to increase revenue and maintain operating margins.” (Modern Healthcare AM, January 6, 2014) It further noted that hospitals will continue to focus on squeezing operating expenses including supply costs and reorganization of services to achieve greater efficiency.


We reported Moody’s Investors Service 2014 Outlook for not-for-profit hospitals in early December—a negative outlook based on another year of slowing of revenue growth, contracting margins and the implementation of the Affordable Care Act. Both Standard & Poor’s and Fitch Ratings also predict a negative outlook for 2014.


Fitch Ratings notes the following key issues: continued pressure on patient volumes, reimbursement challenges and uncertainty related to healthcare reform. It places emphasis on the importance of effective  management and consolidation, integration and alignment strategies. (2014 Outlook: U.S. Nonprofit Hospitals and Healthcare Systems Outlook Report, Fitch Ratings, December 11, 2013)


Standard & Poor’s also lists top line revenue constraints and decreasing operating margins, health reform and changes in the payment environment as leading pressures on hospitals. It adds that the not-for-profit healthcare sector is “at a tipping point—where an increasing number of organizations will find themselves weighed down by issues that outstrip their ability to implement sufficiently robust positive countermeasures.” (The Outlook for U.S. Not-For-Profit Health Care Providers is Negative From Increasing Pressures, Standard & Poor’s Ratings Services, December 10, 2013)


AHA Hospital Statistics Guide

Key findings from AHA’s Hospital Statistics guide are listed below (please note that AHA released its guide to Modern Healthcare only; key findings are from a Modern Healthcare publication):


  • Care continued to shift from inpatient to outpatient, but hospitals showed stronger operating margins than in previous years—total net revenue in 2012 increased to $821.3 billion compared with $755.3 billion in 2011
  • Inpatient beds per capita remained steady at 2.6 per 1,000 people
  • Average length of stay remained consistent at 5.4 days
  • Emergency department visits increased 2.9% in 2012 (compared to a 1.7% increase between 2011 and 2010)
  • Outpatient visits increased nearly 2.9% (compared with a 0.7% increase between 2010 and 2011)
  • Fewer patients were treated on medical/surgical floors—these admissions decreased 1.2% from 2011 (compared to a 0.9% decrease between 2010 and 2011)
  • The level of uncompensated care continued to grow; hospitals spent 6.1% of their expenses on bad debt and charity care
  • The total number of hospitals increased slightly to 4,999 from 4,973
  • Consolidation continued at a rapid pace: 3,100 hospitals were part of a system in 2012 compared with 3,007 in 2011 (In 2008, 2,868 hospitals were part of a system.)
  • Fewer hospitals were part of group purchasing organizations
  • Acute care facilities employed 5.6 million people, about 1.5% more than in 2011.


(“Hospitals on the rebound, show stronger operating margins,”, January 3, 2014.)



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