Study: Hospitals’ finances are healthy

(Tribune Democrat) Hospitals across the region maintained financial health last year, a new state report shows.

But leaders say the continued strength required constant scrutiny and creative programming to identify new opportunities in a dynamic industry.

“We need to be adaptable,” said Richard Sukenik, chief financial officer at Windber Medical Center.

“Each day, another curveball seems to be thrown at us – and we have to adapt to that.”

At Windber, that has meant eliminating the obstetrics program and expanding gynecology. A new emergency department is in the works as part of adjustments to embrace growth in outpatient services.

At Conemaugh Memorial Medical Center in Johnstown and the rest of the Conemaugh Health System, doctors and administrators work as a team to monitor every aspect of the business of health care, Conemaugh CFO Edward D. Pasquale said.

“Going into the future, our costs will have to be controlled by our physicians,” DePasquale said, adding that the system approach allows for economies of scale to save money in supplies and labor costs.

The new Pennsylvania Health Care Cost Containment Council’s hospital financial report shows Memorial’s $348 million in revenue from patient care led the five-county region, which covers Cambria, Somerset, Indiana, Bedford and Blair counties. But the revenue was up by just $1 million, or less than one-half a percent over last year. The region’s average was a 2 percent gain.

Windber, Meyersdale, Miners and Indiana Regional medical centers also experienced increases in revenue, but Somerset was down slightly, from $63 million to $62 million.

All six hospitals finished the 2012 fiscal year in the black, led by Memorial’s hefty 8.5 percent total margin.

Somerset’s drop in revenue was attributed to a decline in traditional in-patient admissions, CEO Ronald Park said.

“It is certainly a concern,” Park said, noting that admissions were up through the first three quarters of the 2013 fiscal year, which ends June 30.

“The pressure is on hospitals to not be admitting people to the hospital,” Park said.

The goal of health care reform is to encourage preventive care by paying health care providers to help consumers stay healthy or at least manage their conditions at home.

“We are working on expanding our primary-care market capture and carefully building a specialty care network of physicians,” Park said.

Indiana Regional Medical Center is taking a similar approach as the other hospitals: Working in partnership with physicians and adding outpatient service such as orthopedic rehabilitation, CEO Stephen A. Wolfe said.

But preventive care can’t begin at the doctor’s office door, he added.

“I think population health care is about interfacing with the patients in their home situations,” Wolfe said.

He predicts that nurses, social workers and other professionals will be following up with patients between appointments to be sure their homes are safe, that they are taking their medication and following up with physicians.

The need for preventive care can be seen in the PHC4 report’s figures showing the only increase in admissions was seen among patients on medical assistance.

“The theory is that they put off care until they really need it,” DePasquale said. “The challenge is to do more things up front.”

Federal health care reform included an offer of more money for state-run medical assistance programs, DePasquale noted, but Pennsylvania has not taken action to accept the money.

The future of government reimbursement for health care and medical assistance, also called Medicaid, remains the elephant in the room of hospital financial planning. That’s especially true in Cambria and Somerset counties, where more than half of all hospital revenues come from Medicare and Medicaid, the report shows.

“It’s a challenge for any hospital,” DePasquale said. “We typically lose money on Medicaid. You have to make money on your Medicare population.”

Uncompensated care, which includes uncollectible bills and charity care, is another concern. The PHC4 report shows it is up statewide, and most hospitals in this region had uncompensated care rates above the state average.

“While a number of hospitals, particularly larger facilities, experienced relatively healthy margins in fiscal year 2012, there are trouble spots among many of the small to midsize hospitals in Pennsylvania,” said Joe Martin, executive director of PHC4.

“In addition, the continued growth of uncompensated care, now over $1 billion annually, remains a major concern.”

Uncompensated care topped $1 billion statewide, up more than 120 percent since 2002.