News: Operating margins for system-affiliated hospitals 63% higher than independents, report suggests

Critical access hospitals (CAH) perform poorly in terms of financial operating margins when compared with their non-CAH, system-affiliated hospitals, according to HealthLeaders.

In a new article released in the JAMA Health Forum, a group of researchers “compare[d] financial measures, including margins and commercial prices, between CAHs and non-CAHs,” and examined these financial metrics by system affiliation.

The study examined financial metrics, including price information, for approximately 4,100 United States hospitals over the 2020-2022 period.

After examining this data set, the authors concluded not only that “CAHs had lower overall operating margins [and] higher Medicare operating margins than other acute care hospitals,” but that the operating margins for “system-affiliated CAHs were 63% higher than for independent CAHs.”

Here are some other highlights from the report:

• Independent CAHs averaged 2.6% overall operating margins, compared to 7.0% for system-affiliated CAHs, 11.4% for independent non-CAHs, and 16.6% for system-affiliated non-CAHs 
• Commercial operating margins were 16.4% for independent CAHs, 25.2% for system-affiliated CAHs, 32.0% for independent non-CAHs, and 41.5% for system-affiliated non-CAHs
• Relative to independent CAHs, standardized inpatient commercial prices were 7.1% higher among system-affiliated CAHs, 15.4% lower among independent non-CAHs, and 13.2% higher among system-affiliated non-CAHs; for outpatient services, the relative differences were 11.7%, −18.4%, and −0.5%, respectively.

Editor’s note: To read the JAMA Health Forum article, click here. To read the HealthLeaders coverage, click here.