Report: Hospitals in region in the red
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More than four in 10 Pennsylvania hospitals reported total margins in the red in fiscal 2008-09, according to a new statewide report, including double-digit percentage losses at Children's Hospital of Pittsburgh of UPMC and the now-closed UPMC Braddock.
In all, 12 of the 29 hospitals in the eight counties of southwestern Pennsylvania had expenses outpace operating revenue, and 15 of 29 moved into negative territory when nonoperating revenue such as investments were considered.
For total margins -- combining operating and nonoperating revenue, and expenses as a measure of overall profitability -- Children's recorded the biggest loss, at negative 15.62 percent.
The deficit "was a direct result of our move to the new campus in Lawrenceville," said Children's spokesman Marc Lukasiak.
Besides moving costs, he said: "In the months leading up to our move, Children's had to maintain both its Oakland and Lawrenceville campuses simultaneously. Also, we had to scale back many elective procedures in the weeks and months before the move in order to reduce our inpatient census to a level manageable for the move."
Another University of Pittsburgh Medical Center hospital, Magee-Womens, led all local hospitals with a 17.79 percent positive total margin.
The data come from an annual report scheduled to be released today by the independent state agency Pennsylvania Health Care Cost Containment Council, based on information collected from 166 general acute care hospitals across the state. The entire report may be viewed at www.phc4.org/reports/fin/09/.
Overall, Pennsylvania hospitals saw their total margins cut by more than half from fiscal year 2008 to 2009, from 4.7 percent to 2.08 percent, with most of the drop coming from nonoperating revenue sources such as investments, endowments and contributions.
Of the 166 hospitals providing information, 73 reported negative total margins in fiscal 2009.
Another factor in the equation is a near-8 percent increase in uncompensated care, demonstrating that "hospitals continue to be affected by these difficult economic times," said Joe Martin, executive director of the cost containment council.
Carolyn Scanlan, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, said in a release that hospitals had taken steps to reduce costs and become more efficient the past two years.
"But hospitals, much like other sectors of the economy, face mounting pressures due to looming pension obligations and the costs of implementing national health reforms."
If proposed reductions in reimbursements for programs such as Medicare are implemented, it could risk hospital employees' jobs, Ms. Scanlan said.
According to the hospital association, hospitals are among the top five employers in 55 of the state's 67 counties.
Jefferson Regional showed a 12.84 percent operating loss in fiscal 2009, and a negative 3.15 percent total margin. Its three-year total margin average, though, is 1.20 percent.
Last year's loss reflected big swings in the market value of Jefferson's investment portfolio, said chief financial officer JoAnne Hahey.
"We had approximately $15 million resulting from the loss of market value of our investments.
Those investments have rebounded in fiscal year 2010."
In the cost containment council's report, total operating revenue includes all revenue allocated by the hospital for operating expenses from patient revenue.
It can also includes investment income, contributions and revenue from other areas such as parking, although some hospitals count investment income and contributions only as nonoperating income.
Canonsburg General Hospital had a negative 2.87 percent total margin average over the past three years, but it recorded positive operating and total margin percentages in fiscal 2009.
By far the largest three-year deficit was the negative 7.74 percent reported at UPMC Braddock, which closed Jan. 31. The second largest deficit over that period was a negative 3.29 percent at UPMC South Side, which has been converted to an urgent care center.
Allegheny General Hospital Suburban Campus in Bellevue, which West Penn Allegheny Health System officials announced Thursday they intend to convert into a long-term care facility with outpatient services, was not listed separately in the report because it is considered part of Allegheny General Hospital.
First Published May 14, 2010 12:00 am