While managed care has helped reduce the average length of stay in hospitals, it doesn't seem to have affected hospital profit margins — at least until very recently. In fact, those margins rose between 1993 and 1997 as the average length of hospital stay dropped. Meanwhile, HMO profit margins dropped.

SOURCE: KAISER FAMILY FOUNDATION ANALYSIS OF INTERSTUDY AND HCIA INC. DATA; AMERICAN HOSPITAL ASSOCIATION; HBS INTERNATIONAL INC.