State Hospital Costs Increased From 2006 to 2010, Report Finds

Wed Jan 9 19:55:10 PST 2013

January 3, 2013

State Hospital Costs Increased From 2006 to 2010, Report Finds

California Healthline

Hospital costs in California increased significantly from 2006 to 2010 in part because of hikes in uncompensated care and labor costs, according to a report by the state's Office of Statewide Health Planning and Development, the Modesto Bee reports.
For the report, OSHPD collected data on more than 400 hospitals (Carlson, Modesto Bee, 12/20/12).
Key Findings
According to the report, operating margins for California hospitals averaged .58% annually from 2006 to 2008 and increased to 1.98% in 2009 and 2.59% in 2010.
The report found that hospitals' total margins -- which include subsidies and investments -- decreased from 6.16% in 2007 to 3.37% in 2008, but the margins increased to 5.99% in 2010 (Clark, HealthLeaders Media, 12/20/12).
The report also found that:
• The percentage of hospitals that were profitable increased from 54.8% in 2006 to 66% in 2010;
• The rate of uncompensated care provided at public hospitals increased from 23.5% of gross revenue in 2006 to 25.5% in 2010, while it made up about 4% of gross revenue for investor-owned or large not-for-profit hospital companies during the four-year period;
• Costs for salaries, wages and worker benefits increased faster than other expenses for hospitals, from $28.1 billion in 2006 to $36.4 billion in 2010; and
• Payments from private managed care health plans averaged $5,054 daily for hospital patients in 2010, compared with $2,426 daily from Medicare and $1,943 daily from Medi-Cal, California's Medicaid program (Modesto Bee, 12/20/12).
Hospitals Prepare for Affordable Care Act
Ty Christensen -- health program audit manager for OSHPD -- said that hospitals are rethinking their budgets because of impending expenses under the Affordable Care Act.
Christensen said, "[T]here's a lot of angst about health care reform overall," adding that hospitals "are proactively looking to make sure they can take on this new unknown health care reform and position themselves for it" (HealthLeaders Media, 12/20/12).

Bryan Sloane
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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