The financial health of nursing homes increased slightly in 1991 despite cutbacks in Medicaid reimbursements, according to a publication released last week by Arthur Andersen & Co. and HCIA Inc., a health-care information company.

"The Guide to the Nursing Home Industry" reported that the median profit margin for all nursing homes increased 0.74% to 3.21%. The rate of increase was lower than in previous years because expenses increased at a faster rate than revenues for the first time in three years, the guide reported.

In a press release, Darrell Pataska, a partner at Arthur Andersen, said that nursing homes have been able to remain profitable partly because of their ability to charge higher prices for specialized services to offset decreases in Medicaid funds. Those services include treatments for patients suffering from Alzheimer's disease and AIDS.

The guide also reported that continued declines in occupancy rates in nursing homes coupled with uniformly low liquidity levels and continued Medicaid cutbacks may spur "an unfavorable turnaround in industry profit margins in the near future."

The guide includes state summaries that outline Medicaid programs, state median values for key measures of nursing home performance, and tables depicting key statewide industry statistics.

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