North Texas Hospitals Among Leaders In Profit Margin

By JASON ROBERSON / The Dallas Morning News

Hospitals are still making money, especially in North Texas.

The recession may have threatened to put the nation’s hospitals on life support, but they managed to post a 5 percent profit margin in 2009.

That ties their 25-year average profit margin, according to an analysis from Modern Healthcare magazine.

Last year, the nation’s hospitals earned $34.4 billion in profit on $691 billion in net revenue.

The report, based on data from the American Hospital Association, said hospitals’ efforts to control expenses more than made up for their sluggish patient revenue. Hospitals slowed the expense growth to 5 percent, compared with the 25-year average of 7 percent.

Few regions exemplify hospital financial health like North Texas. Some of the nation’s most profitable hospitals are based here.

Baylor Medical Center at Frisco has the highest operating margin among full-service hospitals in North Texas, with 29 percent, according to the American Hospital Directory.

A hospital’s operating margin is its operating income divided by revenue. It is an important measuring stick for ranking efficiency among competitors.

A higher operating margin tends to indicate a lower cost of running a hospital. It means the hospital can deliver health care to patients more cheaply than competitors and still make money.

However, high operating margins also are used when deciding where to place blame for health care cost increases.