The Minnesota Hospital Association (MHA) today released its first report examining the financial health of Minnesota’s hospitals and health systems. MHA plans to release this report annually analyzing the most updated financial data available; the report published today examines publicly available fiscal year (FY) 2015 data that hospitals and health systems are required to submit to the Minnesota Department of Health (MDH) each year.
While many financial indicators are relevant to a thorough analysis of financial health, a hospital’s operating margin is the most recognizable bottom-line measure of whether a hospital can continue to meet patient and community needs. The trend of median hospital operating margin has remained steady at approximately 2.5 percent since 2011. While there is no specific benchmark operating margin established for the not-for-profit hospital market, a 5 percent operating margin is considered by health care economists as a healthy baseline.
While the majority of Minnesota’s hospitals experienced a positive operating margin in 2015, MHA noted that 38 hospitals, or 29 percent of hospitals statewide, had negative operating margins. The vast majority of these hospitals were in rural areas. Twenty-one independent hospitals shown in this report had negative operating margins in 2015, while another 17 hospitals with a negative operating margin were associated with systems and therefore are included in the overall system total.
Read the full report.