During the month of April we closed the books on the first six months of activity at BWH. The hospital completed the first half of the fiscal year slightly ahead of budget with a very modest operating margin, due in large measure to higher acuity and patient census levels. The efforts of our entire medical team are to be commended.
However, while the first six months of FY 2000 marked a significant improvement over the same period last year, there remain significant financial challenges on the horizon. The average length of stay, for example, while improved over last year, remains above budgeted levels. Year to date, salaries and wages are unfavorable to budget by more than $6 million. These statistics have been offset by a positive payer mix and higher case intensity levels.
Add to this the fact that uncertainty abounds in the Boston health care market. As we negotiate with managed care companies and government payers for fair reimbursement levels, we are surrounded by instability, political posturing and national nursing shortages. Nursing staff vacancy rates range from 12 to 15 percent nationwide.
Last month, Modern Healthcare reported that Massachusetts was the only state in the nation to show negative hospital profit margins. While hospitals in other New England states like Connecticut (4%), Maine (8.4%), New Hampshire (6.9%), Rhode Island (5.0%) and Vermont (2.6%) showed overall profits, Massachusetts hospitals had a profit margin of -0.2%. The Massachusetts Hospital Association reports that now two-thirds of all hospitals in this state are recording negative operating margins.
In this environment it seems that breaking even with regard to the operating budget is quite an accomplishment. However, breaking even is not enough to sustain our mission to serve the community through research, teaching and free care. We need to reinvest in our facilities to support the highest levels of care. As a result, a minimum positive operating margin of three percent is necessary to meet our needs.
As we move forward into the second half of the year, our goal is to remain committed to the highest levels of patient care, with an eye towards efficiency as a means to stay true to our mission.