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Hospital Recovery Appears V-shaped

John Commins, for HealthLeaders Media, November 16, 2009

But he suggests that a slightly bearish economy would not be completely bad for hospitals. "As I've looked at hospital operating margins this year, a huge source of their operating efficiency gains have been on lower salary and wage costs. Some of that has come from more subdued hiring but a lot of it has come from lower turnover," he says.

"The overall unemployment figures look pretty weak, and that could work in the favor of hospitals in terms of their keeping their salary and benefits inflation in check." Of course, fewer people working in the overall economy means more charity or government-sponsored care, which means lower reimbursements, if any. "There is pressure on healthcare utilization, which could hurt them, but a lot of that would be offset by the margins gained from lower wage pressures," Bachman says.

While there is still plenty to be anxious about, the overall trends of the last few months are clearly showing that the worst of the recession is over for hospitals. That doesn't necessarily mean it's time to dust off the blueprints for the new atrium, or to announce healthy bonuses for the C-suite. But, hospital professionals should take some satisfaction in knowing that—for the most part—they've withstood heavy and unforeseen financial hits, dealt responsibly, compassionately, and intelligently with the worst recession in 70-plus years, and now appear positioned for a healthier future.


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John Commins is a senior editor with HealthLeaders Media.

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