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82% of Healthcare Providers Post Positive Operating Margin For Most Recent Fiscal Year

News  |  By Jonathan Bees  
   March 15, 2018

Healthcare provider responses from HealthLeaders Media's annual survey indicate an optimistic financial outlook, but warning signs loom.

Healthcare providers report improving financial conditions, with only 7% of respondents reporting negative operating margin at their organizations for the most recent fiscal year, and 82% posting positive margin, according to the 2018 HealthLeaders Media Annual Industry Outlook Survey. Four percent report results that are flat.

These results are more positive than in last year’s survey in which 18% reported negative operating margin, and 65% positive margin. Three percent said results were flat.

Operating margins fall in a fairly narrow range, with the majority of respondents (68%) with positive margin at their organizations falling in the 0.1% to 5.9% range. Only 14% of respondents report margins 6% or higher.

This means that organizations have little room to sustain adverse changes in financial circumstances and potentially limits their ability to make necessary investments in value-based infrastructure.

Outlook for 2018

Looking to the upcoming 2018 fiscal year, 58% of respondents say they expect their organizations will produce strongly positive (7%) or positive (51%) financial results. Note that only 9% of respondents say that their organizations have a strongly negative (0%) or negative (9%) financial outlook. Thirty-two percent expect results to be flat.

Viewed positively, the combined results for strongly positive or positive (58%) are eight percentage points higher than last year’s survey result (50%), and the combined results for strongly negative or negative (9%) are six points lower (15%). The results for flat are identical to last year (32%).

However, while responses indicate a degree of optimism as respondents head into 2018, there are some warning signs. Comparing the results for flat for the 2018 (or current) fiscal year (32%) with the results for flat for the most recent fiscal year (4%) reveals a large shift from positive financial results to flat. This indicates that financial conditions continue to be challenging for many providers.

Jonathan Bees is a research analyst for HealthLeaders.

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