54 Statistics on Hospital Medicare Margins

In 2012, the average Medicare margin for a U.S. hospital stayed steady at -5.4 percent, according to the latest data analyzed by the Medicare Payment Advisory Commission.

MedPAC released its March 2014 report to Congress late last week, which included several recommendations and research data related to Medicare payments to hospitals and health systems.

Hospitals are usually underpaid by Medicare, which reimburses organizations under the inpatient and outpatient prospective payment systems. The most recent figure of -5.4 percent means that hospitals, on average, are paid a little less than 95 cents for every dollar they spend taking care of a Medicare patient.

Medicare margins were better for critical access hospitals, which are paid 101 percent of allowable costs and are not on the IPPS and OPPS. Major teaching hospitals also continued to fare better than most other hospitals, as their Medicare margins were -2.6 percent in 2012. In 2007, the average major teaching hospital had a Medicare margin of -0.5 percent.

For-profit hospitals actually made a positive margin on Medicare patients, on average, in 2012. Those facilities posted a 1.5 percent Medicare margin, compared with -7.1 percent for nonprofit hospitals.

Looking at MedPAC's data, hospitals that typically lose the most on Medicare patients are nonprofit, urban hospitals without a teaching program. Hospitals that perform the best are for-profit, rural hospitals and some major teaching hospitals. However, MedPAC noted that although most hospitals continued to lose money on Medicare patients, the average all-payer margin for hospitals reached a 20-year high in 2012. The total margins for hospitals increased to 6.5 percent in 2012, meaning hospitals posted solid operating profits thanks in part to higher reimbursements from commercial payers.

Here are 54 statistics on hospital Medicare margins from 2007 to 2012, based on MedPAC's data. Note: MedPAC defined a Medicare margin as Medicare payments minus "allowable costs" of treating Medicare patients, divided by Medicare payments. MedPAC excluded Maryland hospitals, which are paid on their own unique system.

Type of hospital

2007

2008

2009

2010

2011

2012

All hospitals

-6.1%

-7.3%

-5.4%

-4.7%

-5.5%

-5.4%

Urban

-6.3%

-7.5%

-5.5%

-4.9%

-5.8%

-5.8%

Rural
(excluding CAHs)

-5.2%

-6.1%

-4.6%

-2.8%

-2.9%

-1.9%

Rural
(including CAHs)

-3.7%

-4.3%

-3.2%

-1.8%

-1.6%

-0.3%

Nonprofit

-7%

-8.5%

-6.7%

-6%

-6.8%

-7.1%

For-profit

-3.5%

-2.9%

-0.3%

0%

-0.3%

1.5%

Major teaching

-0.5%

-2.4%

-1.1%

-0.5%

-2%

-2.6%

Other teaching

-6.5%

-7.3%

-5.3%

-4.8%

-5.1%

-5.2%

Nonteaching

-9.4%

-10.2%

-8.2%

-7.3%

-7.9%

-7.2%

More Articles on Hospital Margins:
Inova's Operating Profit Drops, But Investments Lead to Big 2013
Cleveland Clinic's 2013 Total Profit Exceeds $900M
Advocate Health Care Posts 6% Operating Margin in 2013

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