Sources of Profits and Losses

This table shows how much of a hospital’s Total Margin (profit or loss) was contributed by each of six major categories of revenue and costs. The percentage shown for each category of patients/payers is the dollar amount of the profit/loss in that category divided by the hospital’s total expenses. This represents how much the hospital’s total percentage margin was increased or decreased by the profit or loss in that category. For example, if the amount shown for Medicare is -3%, that means the hospital’s Total Margin was three percentage points lower than it would have been if payments from Medicare had equaled the costs of services delivered to Medicare beneficiaries. The sum of the amounts from all six categories will be approximately equal to the Total Margin.

The amount that a payer contributes to the hospital’s total margin is affected by both the size of the profit or loss on that payer’s patients and the proportion of services paid for by that payer. For example, if the hospital has a 10% loss on services to patients insured by Payer A and a 20% loss on services to patients insured by Payer B, but Payer A’s patients represent 50% of the hospital’s total services and Payer B’s patients represent only 5% of the hospital’s total services, then Payer A will reduce the hospital’s total margin by 5% (50% x 10%) while Payer B will only reduce the hospital’s total margin by 1% (5% x 20%).

The percentages shown represent the average using data from the three most recent Cost Reports available as of January 2023, excluding 2020 because of the unusual changes in costs and revenues during the initial months of the coronavirus pandemic.

Total Expenses is based on the most recent Cost Report available.

Additional details on the methodology are available in the Methodology section.