NEW YORK – Academic medical centers have the best financial performance of any group of New York City hospitals, but they have significantly lower margins than those in other states, according to a new report.

The United Hospital Fund's report, "The Financial Condition of the Leading Academic Medical Centers in New York City and the Nation," compares data from four New York City academic medical centers – Montefiore Medical Center, Mount Sinai Hospital, NYU Hospitals Center and NewYork-Presbyterian Hospital – to 17 academic medical centers elsewhere in the country.

Using data from U.S. News and World Report's "Honor Roll of American Hospitals," the analysis examines the performance of each academic medical center hospital and the health system of which each is a part.

"Financial reimbursement of hospitals is sure to change as the result of public policies at the state and federal levels and in response to commercial insurance practices," said James R. Tallon, Jr., president of the United Hospital Fund. "This report shows that changes in hospital payment methods, even those affecting New York's best-performing hospitals, must consider the unique characteristics of the New York market."

The United Hospital Fund is a New York-based health services research and philanthropic organization.

The report, written by financial analysts Steven Fass and Sean Cavanaugh, identifies several reasons for the difference in financial performance. They include:

• Length of stay: The study looked at four tiers of hospitals, grouped by closeness of operating margin. The tier of New York City's academic medical centers had the longest length of stay – 26 percent longer than that seen in the best-performing tier of national academic medical centers and 11 percent longer than that seen in the third tier. (A longer length of stay increases the cost of caring for each patient and limits the number of patients who can be treated in any given period, both of which constrain margins.)
• Payer mix: New York City's academic medical centers treat proportionately more patients covered by Medicaid (which often reimburses below the cost of care) and fewer patients covered by commercial insurance (which, according to a Congressional advisory commission, pays hospitals, on average, 132 percent of cost).
• Service mix: The proportion of surgical admissions (generally more-profitable patient cases) among New York City academic medical centers is one-quarter to one-third less than the proportion seen among their national peers.
• Marketplace competition: Unlike most academic medical centers nationally that have a near monopoly on tertiary and quaternary services in their markets, New York City's academic medical centers operate in a much more competitive market, which the report's analysts believe may translate to pricing pressures and lower commercial margins.

"While some important factors contributing to the financial performance of academic medical centers, such as efficiency, are within their control, others appear to be dictated solely by their location, such as the demographics of their community or the level of competition from other centers," said Cavanaugh, the UHF's director of healthcare finance. "Policymakers and the public need to know much more about these complex organizations because they are clearly strengthening their role in New York City's hospital industry."