May 30, 2016 4 min read

While the majority of Pennsylvania’s general acute care hospitals saw positive operating and total margins, along with a reduction in uncompensated care, nearly one-third of hospitals lost money.

That’s the conclusion of the latest financial analysis performed by Pennsylvania Health Care Cost Containment Council, an independent state agency that gathers, analyzes and reports information about the cost and quality of health care in Pennsylvania.

PHC4 said in a news release that acute care hospitals, both in the for-profit and nonprofit sectors, saw a miniscule decrease – 0.01 percent in total margin, (5.66 percent to 5.65 percent), while operating margin increased 1.21 percent from 4.25 percent to 5.46 percent during the fiscal year that ended June 30, 2015.

Statewide operating income for hospitals increased 34.7 percent from $1.7 billion in FY14 to $2.3 billion in FY15.

“While the data shows many of the 170 Pennsylvania hospitals experienced positive operating and total margins in fiscal year 2015, and uncompensated care dropped 8.6 percent, there were 49 hospitals, or 29 percent, that lost money on operations and 46, or 27 percent, lost money overall,” said Joe Martin, executive director of PHC4.

According to the report, the value of uncompensated care – uncollectible debt and charity care – provided by hospitals in the commonwealth decreased by 8.6 percent, or $92 million in FY15, to a total of $975 million.

Prior to FY15 there was a steady increase in the dollar value of uncompensated care, which rose from $461 million in FY01 to $1.07 billion in FY14.

Among hospitals in the council’s Region 1, which includes those in Washington and Greene counties, for-profit Advanced Surgical Care in North Franklin Township reported an operating margin of 18.31 percent for FY15, with a total margin of 17.91 percent, which bested its three-year total average margin of 15.58 percent.

Advanced Care, which saw its net patient revenue increase to $18 million in FY15 from $15 million in FY14, saw its total operating expenses grow from $13 million in FY14 to $15 million in FY15.

The hospital’s percentage of uncompensated care was 0.28 percent, well below the Region 1 average of 2.25 percent and the statewide average of 2.42 percent.

The other for-profit in the two-county region was Southwest Regional in Waynesburg, which was acquired by Washington Health System as hospitals entered the 2016 fiscal year on July 1.

The 49-bed Southwest Regional, which was operated by RegionalCare Hospital Partners of Brentwoood, Tenn., until June 30, saw its total margin fall 77.24 percent for FY15. Its three-year average total margin was -14.97 percent and its percent of uncompensated care, at 3.34 percent was well above the Region 1 and statewide averages. Its net patient revenue plummeted from $29 million in FY14 to $14 million last year.

The other hospitals in the two counties – Washington, Canonsburg and Monongahela Valley – operate as nonprofits.

Canonsburg, a unit of Allegheny Health System, showed a 1.53 percent operating margin and a total margin of 1.29 percent, which was above its three-year average margin of -1.94 percent. Canonsburg, which saw net patient revenue increase to $45 million last year from $23 million in FY14, recorded uncompensated care of 3.7 percent of its total margin.

Mon Valley Hospital ended FY15 with a 2.16 percent operating margin and total margin of 3.92 percent, besting its three-year average of 3.2 percent. It saw net patient revenue grow to $131 million from $125 million in FY14, while its total operating expenses grew from $127 million in FY14 to $132 million last year. Uncompensated care was 1.08 percent of its total margin.

Washington Hospital, which also operates under the Washington Health System umbrella, ended FY15 with an operating margin of 9.93 percent and total margin of 11.48 percent, well above its three-year average of 9.45 percent.

Washington Hospital’s net patient revenue increased by $1 million in FY15, ending at $224 million. Its total operating expenses fell to $218 million in FY15, down from $229 million in FY14. Its uncompensated care cost was 4.58 percent of its total margin.