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Report shows statewide acute-care hospital revenue up

A report released today outlines financial data for the state’s acute-care hospitals by the Pennsylvania Health Care Cost Containment Council.

The report details hospital utilization and financial health of the systems across the state, measuring fiscal year 2011, from July 1, 2010, through June 30, 2011.

“It is important to closely monitor hospital income levels because relatively small changes in revenues or expenses can make a large difference in the financial health of a hospital,” the report stated.

Three for-profit acute-care hospitals were operating in the midstate for fiscal year 2011: Carlisle Regional Medical Center in South Middleton Township, Cumberland County; Heart of Lancaster Regional Medical Center in Warwick Township, Lancaster County; and Lancaster Regional Medical Center in Lancaster.

All three are owned by Florida-based Health Management Associates Inc.

Carlisle Regional reported a 19.83 percent operating margin, with a 13.1 percent total margin for the year. Heart of Lancaster had an 11.76 percent operating margin and a 7.23 percent total margin for the year. Lancaster Regional had a 5.71 percent operating margin and a 3.51 percent total margin for the same period.

Operating margin is the percent of operating revenue remaining after all operating expenses are paid, according to the report. Total margin includes both operating income and income from all other sources.

Nonprofit hospitals retain all income from their operations within the organization and use it to fund capital improvements, retire outstanding debt and use as a reserve for future needs, according to the report.

About 20 percent of the 165 hospitals included in the report posted a negative total margin for the year. In fiscal year 2010, that number was at 24 percent, according to the study.

Statewide, inpatient revenue increased 4.7 percent, and net patient revenue was up 5.6 percent for all hospital care, the report stated.

Outpatient revenue also increased by 6.9 percent last year, up to $14.95 billion for the state, which made up 41.1 percent of the total net patient revenue for the year, according to the report.

The hospitals received 93.5 percent of their net patient revenue from third-party health care insurers. Commercial health insurers paid 45.4 percent of statewide net patient revenue, or $16.5 billion; Medicare paid for 35.6 percent, or $12.93 billion; and the Medical Assistance program provided 12.5 percent, or $4.55 billion, of the statewide revenue, according to the report. The other 6.5 percent of net patient revenue was from patients and other insurers such as workers compensation.

Net patient revenue and total operating expenses for each of the area’s acute-care hospitals can be found on page 20 of the report.

The foregone dollar value of uncompensated care grew by 11.2 percent, or about $99 million statewide, compared with fiscal year 2010, the report stated. Fifty-one percent of the amount was categorized as bad debt, and about 49 percent was provided as charity care to patients that met each hospital’s charity care guidelines.

Acute-care hospital utilization declined statewide for the year, with discharges at 1.72 million, down from 1.75 million the previous year; patient days down to 8.97 million from 9.14 million in 2010; and average length of stay at 5.23 days last year from 5.9 days in fiscal year 1997, according to the report.



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