Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 20, 1992 TAG: 9203200445
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: PAUL M. BOYNTON
DATELINE: LENGTH: Medium
Moreover, where profits amounted in the 1988-89 and 1989-90 fiscal years to 5.4 percent and 4.8 percent respectively of income, they amounted in 1990-91 to 5.6 percent.
By contrast, a recent (Norfolk) Virginian-Pilot article noted that the average Fortune 500 company in 1990 reported profit margin of 4.6 percent.
And while hospital income and expenses increased by 13.7 percent and 12.8 percent respectively for 1990-91, the increase in the Consumer Price Index from December 1990 to December 1991 was 3.1 percent, and the increase in the Medical Care Consumer Price Index was 7.9 percent.
Industry officials understandably note that unpaid bills for care of patients at or below the poverty level, plus the difference between the amount billed Medicaid and what Medicaid actually paid, amounted to $313 million.
But notable also is that discounts given to Blue Cross and to other insurers and health plans amounted to $301 million, almost the same. Discounts can help a hospital be competitive, and higher hospital charges when paid by non-governmental insurers can be passed on in the form of higher premiums. By contrast, Medicaid and charity patients are the least able to pay a hospital's actual costs, not to mention its charges.
Yet even in this disorderly payment environment, most Virginia hospitals were able to make a profit in the 1990-91 fiscal year after all expenses were met (including the costs of serving charity, Medicaid and Medicare patients) - and after the expenses themselves had increased by 12.8 percent in one year.
Obviously, if the rate of growth in hospital expenses could be kept closer to that of the Consumer Price Index, the rate of increase in hospital charges could be reduced - even if deduction rates (for charity care, Medicaid and Medicare patients, and discounts to some private insurers) and profit rates remained at 1990-91 levels.
Such changes obviously would be to the public's advantage, but they don't seem likely to happen in Virginia anytime soon.
The General Assembly - after deregulating in 1989 capital expenditures for non-bed-related projects, all new equipment and most new services - is now reregulating them. Yet much is already in the pipeline.
The deadline was Feb. 14 for registering new projects without undergoing the reregulation that is to begin July 1. In the 35 days between Jan. 10 and Feb. 14, providers - about 90 percent of them hospitals - submitted registrations for 243 projects with capital costs totaling $832 million. In the preceding 30 months, 112 projects were registered at a total capital cost of $140 million.
How many of the 243 new projects would have been approved had they been subject to regulation is anybody's guess. What is no guess is that those projects will have to be paid for, meaning the public, one way or another, ultimately will get the bill.
Paul M. Boynton is executive director of the Eastern Virginia Health Systems Agency, Inc., in Norfolk.
by CNB