Moody's rated the median profit margin of for-profit hospitals at about 15%.
The report said that:
- Investments that hospitals are making to foster future growth could also compress margins in the near term. These include upgrading information technology and aligning with physicians in a bid to boost patient referrals.
- Growth in adjusted admissions will likely remain weak as the uninsured or people whose premiums and co-pays have risen continue to defer non-urgent care. Birth rates, and related hospital admissions, have also declined amid high unemployment and economic sluggishness. This trend will likely continue constraining volume growth.
- Pressure on pricing should continue as commercial insurers resist payment increases and Medicare reimbursements fall.
- Longer-term factors should support demand for hospital services, including the aging baby boomers and consumers' increased access to healthcare through the 2010 industry reform package.
John Commins is a senior editor with HealthLeaders Media.