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CA Hospital Margins on the Rise

Cheryl Clark, for HealthLeaders Media, December 20, 2012

An analytic tool launched Wednesday by the nation's largest state hospital database reveals that California hospitals are slowly rebounding from the recession, with total margins rising from just above 3% in FY 2008  to 6% in 2010.

A series of five-year charts from 2006-2010, specifically those reflecting total margin or net income margin, "shows us that in the last couple of years, hospitals made more of a profit, but we're talking small profit,"  says Ty Christensen, health program audit manager for the Office of Statewide Health Planning and Development.

The Sacramento-based agency collects statistics on cost and utilization for the state's 433 acute care hospitals, the largest acute care database in the country.

This particular report is the first in a series to cover a five-year period, and is intended to portray for community leaders and policy makers a baseline picture of hospital financial health during the period at or just before hospitals begin implementation of healthcare reform, Christensen says.

Even though cost pressures stemming from the Patient Protection and Affordable Care Act are now forcing hospitals to rethink their budgets, that might have only just been starting to happen in 2009 and 2010, when the legislation was undergoing heated debate or had just passed a few months earlier, he says.

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