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CA Hospital Margins on the Rise

Cheryl Clark, for HealthLeaders Media, December 20, 2012

"Each hospital looks at its operations and realizes the downturn of the market and the economy, and what they need to do. And I know there's a lot of angst about healthcare reform overall, and more of a concern they not get behind and swept under. They are proactively looking to make sure they can take on this new unknown healthcare reform, and position themselves for it."

Christensen adds that the state's financial picture may help hospitals and policy makers in other states understand national trends, but cautioned that California has some extenuating circumstances, largely because its large portion of Kaiser hospitals and health plans, which enroll a significant percentage of the state's insured.

Noteworthy portions of the data:

Operating margin averaged .58% per year from 2006 to 2008, but increased to 1.98% in 2009 and 2.59% in 2010.

Total margin, which includes subsidies and investments, decreased from 6.16% in 2007 to 3.37% in 2008, largely because of loss of investment income during the market downturn. But total margins increased to 5.99% in 2010.

City/county hospitals, which take care of the poor,  provided "significantly" more uncompensated care than other facility types, averaging 23.8% of charges. That increased to 25.5% in 2010. Investor and non-profit hospitals provided about the same level of uncompensated care, about 4.1% and 4.3% of charges, respectively.

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