An employer-led health care coalition has released its own review of hospital finance data — finding a “bifurcated” market — that disputes a largely gloomy report from the Indiana Hospital Association last week.
That analysis, prepared by the health care consultancy Kaufman Hall, found that operating margins at 53 hospitals in the state have declined as the national median has risen.
The Employers’ Forum of Indiana sought to replicate the findings, but said there wasn’t sufficient information disclosed. Instead, the group used publicly available information to examine finances at the state’s 114 general acute care hospitals and compile its own analysis.
The forum found the financial performance of Hoosier hospitals varies widely — and that the data “does not support a uniform narrative of financial distress.”
“Operating margins alone do not provide a full picture of financial viability,” the report said.
The group argued that focusing on operating margins doesn’t include income from investments, donations, grants, cafeterias, parking, rent, retail pharmacy and medical supply sales, and more.
The forum used net income instead, defined as the amount retained by a hospital after all income and expenses are accounted for, and noted the difference between the two “is substantial.”
Operating margin losses at Indiana hospitals are higher than the national average, according to the report — falling by 4.8% versus 3.9% — but net profit margins are 43% above the national average — at 12.9% versus 9%.
The report cited 2024 Medicare Cost Reports from the National Academy for State Health Policy.
The forum acknowledged that dozens of hospitals are in crisis, however.
“Publicly available data indicates we have a bifurcated market where some hospitals are extremely profitable while others are clearly struggling,” said Randa Deaton, the group’s president and CEO, in a Thursday news release.
The report shows that 16 acute care hospitals averaged a net profit margin of -15%, losing more than $300 million collectively. In the next-worst tier, another 16 facilities had a net profit margin of -4.7%, losing a collective $100 million. The remaining 82 hospitals were in the black, ranging from breaking even to 37% net profit margins.
“Policymakers should therefore rely on complete financial data and pursue targeted solutions that protect access where it is most at risk while appropriately accounting for financial capacity of the state’s most profitable hospitals,” Deaton said.
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