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Operating profit margins at U.S. hospitals flattened at an annualized average of 3.69% in 2000, indicating only a slim degree of financial health, according to a report by Solucient, a provider of benchmark information on health care.
Hospital operating margins increased 0.41% over 1999 and remained relatively low, a full 36.6% lower than in 1997. Solucient president Gregg Bennett says margins of 3% to 4% are not sustainable in the long run, especially given the pressure from increasing drug costs and hospital labor shortages. Bennett also says hospitals are still feeling the sting of the 1997 Balanced Budget Act and its clamp on Medicare payments.