Profit at Texas Hospitals Swells Despite Decline in Inpatient Days

In 2011, hospitals in the Dallas-Fort Worth area of Texas recorded $1.59 billion in profit, representing 10.3 percent of net patient revenues, according to a report from healthcare consultant Allan Baumgarten.

The high profitability among Dallas-area hospitals stood in contrast to the number of inpatient days, which fell by 3 percent in 2011.

In Houston, hospitals posted $1.8 billion of net income in 2011, resulting in an average profit margin of 11.9 percent. San Antonio hospitals tallied $500 million of profit, or 10.9 percent of net patient revenue. Hospitals in and around Austin recorded $544.1 million for a profit margin of 15.5 percent, the highest of the areas Mr. Baumgarten studied. Texas hospitals owned by Nashville, Tenn.-based Hospital Corp. of America were generally among the most profitable.

Mr. Baumgarten said Texas hospitals were able to post high profit margins, despite the decline of inpatient utilization, because of the active merger and acquisition market, improved efficiency and quality, and the ability to nab better rates with commercial payers due to negotiating clout.

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