Most Western Pennsylvania hospitals say they are operating at a loss
April 7, 2016 10:08 PM
Pat Sullivan/Associated Press
With 34 of 62 hospitals responding to the survey, 55 percent reported losses, compared with 34 percent of centers that were in negative territory at the June 30 end of the 2015 fiscal year.
By Steve Twedt / Pittsburgh Post-Gazette
Better than half of Western Pennsylvania’s hospitals are spending more to treat patients than they are receiving as payment, according to a member survey released Thursday by the Healthcare Council of Western Pennsylvania.
With 34 of 62 hospitals responding to the survey, 55 percent said they had recorded operating losses for the last six months of 2015, compared with 34 percent of centers in negative territory on June 30, the end of the 2015 fiscal year.
“We’ve had ups and downs before, but I don’t think we’ve ever seen this many at that level,” said Patricia Raffaele, vice president professional services for the healthcare council, formerly the Hospital Council of Western Pennsylvania.
“These [margins] are clearly not sustainable over the long run,” concluded Denis Lukes, the counsel’s chief financial officer.
Mr. Lukes cited a number of reasons for the downturn. Perhaps the single biggest factor has been the continuing trend of insurers designating more hospital stays as lower-paying outpatient observations instead of inpatient admissions.
But another trend playing a significant role, said Mr. Lukes, is the consumer shift to high deductible insurance plans which carry higher out-of-pocket costs when someone seeks care. As patients are being held responsible for a greater share of the costs, he said, they are more frequently postponing or forgoing surgeries to avoid the expense.
The survey responses bear that out as inpatient surgeries decreased 5.82 percent in the last half of 2015 compared with the same period in 2014, and outpatient surgeries decreased 0.67 percent.
Combined, that represents more than 5,500 fewer surgeries which constitute a major revenue source for hospitals.
Also, when patients do seek treatment, Mr. Lukes added, the higher deductible means they sometimes cannot afford to pay the bill, leaving the hospital on the hook. With some plans, he said, “There may be a $500 or $600 co-payment for an ER visit, and sometimes even after the deductible is met.”
Government payers such as Medicare and Medicaid have also reduced payments, which Mr. Lukes said do not cover the hospitals’ cost of providing care.
The survey, which included responses from nearly every hospital in Western Pennsylvania, showed that smaller hospitals are feeling the most financial pressure.
Hospitals with fewer than 100 beds had a negative 5.62 operating margin between July 1 and Dec. 1, Mr. Lukes said, compared with a negative 2.89 margin for the fiscal year that ended June 30.
“Obviously you can’t continue to lose 5 percent a year,” he said, “and the things on the horizon don’t look any better than the things we’ve been through.”
Steve Twedt: email@example.com or 412-263-1963.
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