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Audit (A-07-07-02733)

09-16-2008
Review of Profitability Analysis of New Orleans Hospitals

Executive Summary

On August 1, 2007, five New Orleans hospital groups (testifying hospitals) testified before the House Committee on Energy and Commerce that they had experienced significant operating losses following Hurricane Katrina in 2005. At the request of the committee, we analyzed the testifying hospitals' profitability trends.

For fiscal years (FY) 2002-2006, each of the testifying hospitals had a significantly different profitability trend. The hospitals' cumulative results varied by type of expenditure and FY. Cumulative patient-related care margins were positive for FYs 2002-2003 and negative for FYs 2004-2006. Cumulative total margins were positive for FYs 2002-2003 and negative for FYs 2004-2005. For FY 2006, the hospitals had a cumulative positive total margin and received additional funding from Business Interruption insurance payments and additional Federal funding for hurricane damage. Cumulative Medicare program margins were positive for FY 2002 and negative for FYs 2003-2006. Cumulative Medicaid program margins were negative for FYs 2002-2006.

This was an informational report, and we made no recommendations.

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