News Headlines Article

Hospitals, systems see operating margins shrink as expenses climb
Modern Healthcare

U.S. hospital systems last year saw their profitability erode for the first time since 2008 as rapidly rising expenses outpaced revenue growth at providers across the country, according to a report from Standard & Poor’s.

Operating margins weakened in 2013 despite a 5% increase in revenue, as expenses rose an average of 7%, the credit rating agency found.

And the bad news about that revenue growth is that it didn’t typically come from core operations, namely higher patient volume. Rather, it was related to consolidation, more referrals from increased physician employment and higher payments from state provider fee programs and the federal government’s meaningful-use incentive program.