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CPBJ Extra Blog

So far, medical groups are not cash cows

You know, because we keep telling you, that hospitals and health systems have been buying up medical groups all over the place in recent years.

But do you know how the balance sheets on those deals are looking?

I’ve been thinking about this because the Pennsylvania Health Care Cost Containment Council has come out with its incredibly helpful annual report on the fiscal condition of general acute care hospitals. Here’s a glimpse of this year’s report:


Net income in millions FY13

3-year average total margin FY11-13

Region average





Ephrata Community Hospital



Good Samaritan Hospital



Hanover Hospital



Holy Spirit Hospital



Lancaster General Hospital



Penn State Milton S Hershey Medical Center



Pinnacle Health Hospitals



York Hospital





Carlisle Regional Medical Center



Heart of Lancaster Regional Medical Center



Lancaster Regional Medical Center



Memorial Hospital




It’s fabulous — but every time I see it, I think, “Not the whole picture.” In case you haven’t looked at a hospital or health system corporate structure lately, let me remind you: In Facebook relationship status terms, they fall under “It’s complicated.” So, alas, giving you the complete picture with appropriate context is beyond me, as things currently stand.

Showing you highlights of the last three tax filings of the area’s nonprofit medical groups, however, is not. So here goes!

Year Individuals Employed Total Revenue Revenue Less Expenses
Northern Lancaster County Medical Group
2009 391 $32.40 million $1.06 million
2010 393 $30.70 million -$572,495
2011 340 $32.89 million -$1.49 million
Good Samaritan Physician Services  
2009 100 $9.29 million -$7.44 million
2010 100 $9.94 million -$8.23 million
2011 100 $11.61 million -$9.59 million
Spirit Physician Services Inc.  
2009 255 $24.62 million $395,423
2010 373 $29.67 million -$538,383
2011 373 $50.04 million $1.82 million
Lancaster General Medical Group  
2009 623 $52.04 million -$22.59 million
2010 616 $46.80 million -$25.59 million
2011 691 $53.07 million -$26.44 million
Pinnacle Health Medical Services  
2009 560 $31.20 million -$15.29 million
2010 498 $40.31 million -$19.00 million
2011 563 $51.63 million -$16.43 million
WellSpan Medical Group    
2009 1,529 $188.70 million -$3.42 million
2010 1,631 $212.84 million $168,874
2011 1,732 $223.16 million $71,762

Definitely worth a look, wouldn’t you say?

• • •

I have two Highmark items of note for you this week.

First, remember the feud between Highmark and UPMC? It’s still going, and so Gov. Tom Corbett is again attempting to wade into the fray and stop it. This time it’s via the creation of a “Patients First” leadership team, with a threat of bringing Attorney General Kathleen Kane into the picture.

The Pennsylvania Medical Society issued a statement in response, with CEO Michael Fraser saying that having the governor step in “is very encouraging.” In related news, Highmark mentioned during a financial report Monday that despite the dispute with UPMC, Highmark retained 95 percent of its customers in Western Pennsylvania at the end of 2013. For upcoming July renewals, it’s at “the high 80 percentages, almost 90 percent.”

Second, Highmark announced it is delaying implementation of a “monitored anesthesia care policy.” Highmark’s news release doesn’t use the name of the medication in question, propofol, but the medical society’s posting in favor of the delay did. Neither, however, packs the emotional punch of the person who emailed me on the subject, opining that people “may be reluctant to have the procedure done without the propofol and not in a position to pay for the anesthesia component out of pocket. This action may set back the years of work done to bring the need for screening and prevention of colon cancer to the forefront.”

On a related note, this sentence is interesting: “Because of doctor backlash, Aetna, one of the nation’s largest health insurers, has indefinitely delayed a policy it tried to implement in 2008 that would have excluded this coverage for low-risk patients, said Dr. James Cross, Aetna’s chief of national medical policy and operations.” So is the article that contains it, which is titled, “Study: Colonoscopies often come with costly, unnecessary sedation.”

I have a feeling we’ll be hearing about this one again.

• • •

This is a helpful update: “Health care law’s small-business exchange right on track — with one glaring exception.”

• • •

You know you want the latest on the observation status scuffle: “CMS considering alternatives to ‘two-midnight’ rule.”

• • •

The Penn State Hershey Stroke Center launched LionNet, its stroke telemedicine program, in July 2012. The program involves audiovisual technology that allows Hershey’s neurologists and neurosurgeons to aid in the diagnosis and treatment of stroke patients at 10 member hospitals, with a goal of ensuring that eligible patients receive tPA, the “clot buster” drug, as quickly as possible — ideally in the community hospital setting, reducing the likelihood a patient will need to be flown to Hershey.

Hershey recently reported that its docs have now done more than 840 consults through the system. Those resulted in 29 percent of ischemic strokes at member hospitals being treated with tPA, compared to the national average of just 5 percent to 8 percent for community hospitals nationwide. Furthermore, of those 840-plus patients, only 25 percent had to go to Hershey, with 75 percent staying in their local hospital to receive care.

• • •

On May 30, the Centers for Medicare & Medicaid Services announced that in March they conducted “a successful ICD-10 testing week.” The numbers interested me most: Approximately 2,600 participating providers, suppliers, billing companies and clearinghouses participated, “representing about five percent of all submitters.”

Five is a very small percentage. That is all.

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