BALTIMORE -- Maryland hospitals produced profits of $87 million last year, a boost of more than $9 million from the previous year, while the cost of a hospital admission rose less than the national rate, according to statistics released recently.
"Profits are not a dirty word in our business," said John M. Colmers, executive director of the Health Services Cost Review Commission, the state agency that regulates hospital rates.
"The hospitals earned these profits by being efficient. These trends show that hospitals are increasingly cost-effective and are in fair financial shape."
The commission's report, containing data from hospitals' independently audited financial statements, shows that the cost of hospital admission in Maryland rose 6.42 percent while the national average was 9.22 percent.
Nineteen hospitals statewide had profits exceeding $2 million last year, compared with 14 in 1986. Two hospitals -- North Charles General in Baltimore, now part of the Johns Hopkins Health System, and Prince George's General in Cheverly -- had losses exceeding $1 million.
In total, 43 acute care hospitals showed profits while 10 hospitals posted losses.
Leading the profit makers were four Baltimore institutions: Francis Scott Key Medical Center, $6.3 million; the Johns Hopkins Hospital, $5.3 million, both part of the Johns Hopkins Health System; Mercy Hospital, $4.8 million; and Sinai Hospital, $4.2 million.
The hospitals are being more efficient by reducing unnecessary testing and excessive lengths of stay, Colmers said.
While hospital costs per admission -- what the hospital spends -- rose 6.4 percent, from $3,342 in 1986 to $3,556 in 1987, hospital charges per admission -- the cost to the consumer -- rose 8.8 percent, from $3,682 in 1986 to $4,006 in 1987.
"In our system, the difference or markup between cost and charges is among the lowest in the country," Colmers said. "In Maryland, it's about 13 percent. Nationally, it's about 25 percent. Our lower markup is the result of our more equitable payment system."
Colmers was referring to Maryland's all-payor system, in which all third-party payors pay commission-approved rates to hospitals. But, Walter Sondheim, the commission's vice chairman, warned, "The hospital cost and charge problems are not under control when they are escalating at rates well in excess of underlying inflation."