NJHA: Hospital Finances Show Troubl...( Report Says 2007 Total Margins Shrunk...),Health

Report Says 2007 Total Margins Shrunk; Nearly Half Lost Money

PRINCETON, N.J., Nov. 25 /PRNewswire-USNewswire/ -- Nearly half of the state's hospitals - 47 percent - posted overall losses at the end of 2007, according to new audited financial data contained in the 2008 edition of the New Jersey Hospital Association's Financial Status of New Jersey Hospitals report.

The data shows that New Jersey's hospital industry was on shaky financial ground long before the recent economic meltdown.

New Jersey hospitals reported a dramatic decrease in hospital total margins in 2007, which include income from restricted and non-operating funds such as grants, endowments and investments. The statewide average total margin dropped from 3.1 percent in 2006 to 0.9 percent for 2007 - the lowest it has been since 2002. The 2007 data did reflect a modest increase in year-end operating margins, from 0.6 percent in 2006 to 1.3 percent in 2007. However, the 2007 figure constitutes the 11th consecutive year that New Jersey hospital operating margins have been less than 2 percent.

Compiled from audited financial data submitted by acute care and specialty hospitals and health systems statewide, the report shows total 2007 hospital revenues of $18.263 billion and total expenses of $18.026 billion. The resulting $237 million gain represents a 1.3 percent operating margin, up from 0.6 percent posted at year-end 2006. However, losses from non-operating funds of $70.5 million lowered the total income to $167 million, for an overall margin of only 0.9 percent.

In the same year, three New Jersey acute care hospitals closed and five filed for bankruptcy. "This data underscores the longstanding challenges New Jersey hospitals face in remaining financially sound in the face of insufficient reimbursement from Medicare, Medicaid and the state charity care program," said NJHA President and CEO Betsy
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