Excela Health back in black for quarter

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After recording a negative 3.1 percent operating margin for the fiscal year ending June 30, Westmoreland County-based Excela Health was back in the black by $556,000 for the first quarter of the current fiscal year, a .05 percent operating margin.

Excela officials are budgeting for a break-even operating margin in fiscal 2014, citing continuing revenue losses due to federal sequestration spending cuts and uncertainty about future revenue from government-based programs.

A report by ratings agency Moody's Investors Service confirmed Excela's A3 bond rating on its $93.3 million of outstanding revenue bonds, noting the system's healthy 60 percent market share in its service area and its low debt load.

But the ratings agency did revise its outlook from stable to negative, citing Excela's "thin operating performance."

Moody's also noted that Excela experienced "sizable volume declines in inpatient admissions, outpatient visits and surgical procedures" in the recently completed fiscal year, though outpatient visits and surgeries "have shown good growth" in the most recent quarterly results ending Sept. 30.

While Excela's 60 percent market share in its service area is strong, population declines in Westmoreland County over the past decade have cut traffic to Excela facilities, including its three hospitals, Westmoreland, Latrobe and Frick. Since 2009, the Moody's report said, total admissions including observation stays has fallen from 40,054 to 32,734 this past year.

Year over year, inpatient admissions dropped from 29,087 to 27,137 and observation stays decreased from 5,905 to 5,597.

Chief Financial Officer Timothy Loch said, "We're not just hospitals anymore," citing Excela's growth in outpatient facilities and home health services.

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