14 DAY TRIAL // According to a Thomson Reuters financial analysis of US hospitals, most of these institutions currently register no profits from their activities. Their median profit margins are at zero, and chances are that they will remain very low for the next period. In addition, of the 400 hospitals that have been surveyed, more than half are losing money at an alarming rate. These are private institutions after all, and they can be closed if their owners cannot afford them. And this would mean many people ending up in the street, with no nearby source of immediate health care.
“Just like it hurts when people open up their 401(k) statements, it is like that for hospitals only much, much worse. This is something we haven't really ever seen before,” Thomson Reuters Healthcare business Chief Research Officer Gary Pickens told Reuters in an interview. “Hospitals are facing unprecedented economic stress and many of the indicators we're seeing suggest that things will get worse before they get better,” he added. Pickens went on to pinpoint that most of the institutions that had been observed operated at profits of 3 to 4 percent, which meant that they had little “room” for errors.
“While operating margins are generally holding steady, non-operating margins have all but disappeared from hospital balance sheets. That makes it difficult for hospitals to secure financing for new equipment and to fund expansion efforts,” Pickens shared. His team has tracked the activity of 439 hospitals, both large and small, and has reviewed some 20 financial indicators to get the best perspective possible on their current situation.
Fortunately for the people, none of these institutions have thus far announced lay-offs, bed closures, or a decline in patient volumes. “In terms of what they can do, they are a little bit between a rock and a hard place. The demand for their services is continuing,” Pickens stated. On Thursday, a meeting between President Obama and health care specialists is scheduled to take place, as the White House leader is currently struggling to enforce a financial stimulus for the health system meant to lift it from its condition. However, even Obama admits that money alone cannot do much good, and that a thorough reform is in order.