Differences in Measurement of Operating Margin: An Update

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Profitability is a determinant of hospital financial distress and closure. Operating margin is one of the key measures of hospital profitability. Accurate use of the measure relies on the quality of data, and previous studies found inconsistencies in how operating margin is calculated and reported.  There are three definitions of operating margin; each will produce different results.  The brief, Differences in Measurement of Operating Margin-An Update, examined the measurement of operating margin of rural and urban hospitals using recent data, and we assessed the distribution and extent of extreme values of operating margin. This brief serves as a technical note for researchers and policy makers when using and interpreting operating margins calculated using Medicare Cost Report data.

NC Rural Research Program