WARRENDALE, Penn., April 21 /PRNewswire/ -- A new financial report released this week by the Hospital Council of Western Pennsylvania shows that hospitals throughout western Pennsylvania continue to struggle with operating margins, expenses and increases in uncompensated care.
“All of this comes at a time when hospitals in our region are facing additional payment cuts and an estimated loss of inpatient revenue of more than $87 million in total from Medical Assistance as outlined in the proposed state budget,” said Ian Rawson, Ph.D., president of Hospital Council. “In addition, there would be a community penalty, and with this penalty hospitals in our region would lose more than $212 million in total.”
The report, called the Flash Survey, covers the period from July 1, 2004 through December 31, 2004 and tracks financial indicators for 56 hospitals in western Pennsylvania. The Flash Survey is released quarterly to hospitals in the region and covers such financial indicators as operating margins, uncompensated care, inpatient and outpatient admissions, average length of stay, occupancy rate, emergency room outpatients visits and adjusted cost per case.
“We are seeing a trend of some larger hospitals reporting higher operating margins but at the same time, smaller hospitals are reporting that they are operating in the red,” said Walter K. Wayne, chief financial officer of Hospital Council of Western Pennsylvania. In this report, exactly half of the hospitals reported a net operating margin gain and half reported a net operating margin loss. " Also, we are seeing urban hospitals reporting an average net operating margin gain of 2.46 percent compared to an average net operating margin gain of 0.58 percent for rural hospitals.”
Overall, the survey shows that for the first six months of FY 2005, western Pennsylvania hospitals reported a 2.16 percent net operating margin gain, up 2.26 percentage points from last year’s 0.10 percent loss. The median net operating margin percentage was a gain of 0.02 percent, compared to a 0.36 percent loss last year.
“The proposed budget cuts in the Medical Assistance program would be devastating to our region’s most vulnerable population as well as to hospitals in our region,” Rawson said. “These cuts, if they would go through, would have a serious impact on low-income children, the elderly, and those with disabilities. For some of the hospitals, these cuts would represent a question of their financial survival.”
In addition, under the proposed state budget hospitals with a net revenue margin of more than 1 percent would lose medical assistance supplemental payments such as payments for medical education and disproportionate share.
At the same time, hospitals in western Pennsylvania continue to provide a growing amount of uncompensated care to their communities. For example, in the first six months of this fiscal year 56 hospitals provided $143 million in uncompensated care compared to $113 million in uncompensated care provided by hospitals in the first six months of last year.
In addition, hospital expenses increased 5.7 percent, which is lower than the 7 percent increase reported last year. As in the past, the increase in expenses is directly related to the increases of 5.6 percent in salaries, 2.8 percent in fringe benefits and 7.4 percent in non-salary related costs.
Other trends for the first six months of fiscal year 2005 include: * A decrease in admissions of 1 percent * A decrease in patient days of 0.9 percent * A slight decrease in occupancy rate from 64.3 percent last year to 63.7 percent * An increase in full time equivalents (FTEs) of 2.3 percent * A slight increase in average length of stay by 0.1 percent to 4.54 days * An increase in outpatient registrations by 0.8 percent * A slight decrease in surgical operations of -0.8 percent
Hospital Council of Western Pennsylvania is a regional membership association which provides support to healthcare providers throughout the region. Hospital Council provides data, information, advocacy, education and consultative support to hospitals, specialty care facilities, nursing homes and other providers throughout western Pennsylvania.
Hospital Council of Western Pennsylvania
CONTACT: Patricia Raffaele of the Hospital Council of Western PA,+1-724-772-7202, or raffaelp@hcwp.org