Operating margin is equal to net operating income divided by operating revenue, and reflects the margin achieved from providing direct care to patients, plus items such as cafeteria and gift shop sales, rental of space, and other miscellaneous revenues. Finally, the total margin is equal to total net income divided by total revenue, and reflects the margin achieved from providing direct care to patients, items such as cafeteria and gift shop sales, rental of space, miscellaneous revenues, and investment income. Michigan's nonprofit hospitals can't just break even. They must achieve positive margins. In 1997, Michigan's nonprofit hospitals provided free care to 1.1 million uninsured residents, including more than 211,000 children.
Adequate margins enable hospitals to care for everyone, including the uninsured and the poor.
As key employers and the community's primary care providers, hospitals must achieve positive margins to attract and maintain high-quality medical and professional staffs. Michigan citizens demand and deserve quality care delivered by trained and skilled caregivers, whose compensation must come from hospital revenues. Hospitals must achieve positive margins to keep their medical equipment and technologies current and operational. Medical technology advances save lives every day, and Michigan citizens demand and deserve access to them. Virtually every Michigan nonprofit hospital offers programs designed to improve community health.