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Explanation of Exhibits
The raw numbers from this study are staggering. IPPS hospitals made $8.7 billion in FY01 from treating Medicare inpatients, but by FY07, they had lost $2.4 billion. IPPS hospitals have continued to lose billions per year providing patient care services to all patients. IPPS hospitals lost $9 billion in FY01 and continued to lose billions every year. However, IPPS hospitals have generated huge profits from all sources of revenues, ranging from $15 billion in FY01 to almost $35 billion by FY07.
For-profit hospitals have the healthiest margins from patient care services, but many not-for-profit and government hospitals are able to make up for negative patient care margins with income from other sources. Still, most government hospitals have double-digit negative margins and significant numbers of for-profit and not-for-profit hospitals have negative margins approaching double digits.
The numbers of positive versus negative Medicare margins by type of control is a mixed bag of winners and losers. But what is striking is that the winners have double-digit positive margins, while the losers have double digit negative margins. The not-for-profit hospital group has seen the largest decline in positive margin hospitals.
DSH hospitals have much higher Medicare margins than non-DSH hospitals. DSH hospital Medicare margins have remained positive during the period studied, except FY 2008 when DSH Medicare margins reached negative status.
Teaching (IME) hospitals have much higher Medicare margins than non-IME hospitals. IME Medicare margins have remained positive during the entire period studied.
The average Medicare payment per case varied widely from state to state during the period studied. Since Medicare payment policies are designed to roughly approximate the costs of providing care, states with higher payment should be the states with higher costs. Compare this chart with the chart with Medicare costs per case.
The average Medicare costs per case varied widely from state to state during the period studied. Because Medicare payment policies are designed to roughly approximate the costs of providing care, states with higher costs should be the states with higher payments. Compare this chart with the chart with Medicare payments per case.
It is interesting to see how Medicare payment policies have affected different states. For example, in states like Massachusetts, New York, and Pennsylvania , Medicare payment policies consistently overcompensated for Medicare costs resulting in very high positive Medicare margins during the entire period studied. But in states like Arkansas, Delaware, Idaho, Wisconsin, and Wyoming, Medicare payment policies consistently undercompensated Medicare costs, resulting in very low negative margins for all periods. In still other states like California and Colorado, very high positive margins fell to very low negative margins, suggesting a disconnect between payment policy and cost increases.
Publication Date: Saturday, August 01, 2009