New Jersey’s hospitals again posted thin year-end operating margins for 2005 with almost 40% of them operating in the red, according to the New Jersey Hospital Association’s Financial Status of New Jersey Hospitals Report. In fact, New Jersey hospital profit margins have been at 2% or lower for the last nine years. The report shows total year-end 2005 hospital revenues of $17.03 billion and total expenses of $16.75 billion. The resulting $281 million gain represents a 1.6% aggregate operating margin. According to the American Hospital Association’s Hospital Statistics 2007 Edition, the national average operating margin for the same period was 3.7%. The average number of days a patient’s bill was in accounts receivable is 49 days, representing the lowest value for this indicator since NJHA began tracking it almost 30 years ago.
Based on 2005 revenues, New Jersey hospitals have no means to increase staff, upgrade facilities, or purchase new equipment, all of which could eventually affect access to patient care, according to Sean Hopkins, senior vice president of health economics for NJHA.“ Although hospitals did not sustain a loss in their operating margins, New Jersey’s current healthcare climate will not allow hospitals to remain competitive, and the results will be loss of revenue, which could result in more hospital closures,” said Hopkins.
