Apr 25, 2017 4 min read

Hospitals across Pennsylvania saw their percentage of uncompensated care plummet more than 13 percent for the 2016 fiscal year, according to the latest report from the Pennsylvania Health Care Cost Containment Council.

The decline in uncompensated care demand is one of the highlights in PHC4’s financial analysis of general acute care hospitals across the commonwealth released today.

PHC4 is an independent state agency charged with collecting, analyzing and reporting information that can be used to improve the quality and restrain the cost of health care in the state.

The first volume of the report presents a financial profile of Pennsylvania’s 168 general acute-care hospitals across nine regions, with data drawn from the 2016 fiscal year performance. It includes five area hospitals.

According to PHC4, Region 1 acute-care hospitals in eight counties of Southwestern Pennsylvania – which include Advanced Surgical Care, Canonsburg, Monongahela Valley, Washington and Washington Health System-Greene – averaged an operating margin in FY16 of 5.30 percent and total margin of 5.35 percent. Of the amount of care provided, an average of 1.95 percent was uncompensated care.

The report notes hospitals need positive income levels (total margin) to operate effectively. Those that have a negative total margin, or deficit, are not receiving sufficient revenue to pay all of their expenses, and must find other sources of revenue, such as debt restructuring, charitable donations or endowments, or review spending patterns to find ways to save on costs.

Statewide operating income increased from $2.3 billion in FY15 to $2.6 billion in FY16. As a result, the statewide operating margin increased from 5.44 percent in FY15 to 5.94 percent in FY16. Total operating revenue increased to $44.4 billion, and operating expenses increased to $41.7 billion in FY16.

Of the five area hospitals in Washington and Greene counties, Advanced Surgical saw net patient revenue (NPR) of $5 million in FY16, down from $18 million in FY15. The orthopedic for-profit hospital also reported total operating expenses (TOE) of $5 million.

Canonsburg’s FY16 NPR of $43 million was down $2 million from the previous fiscal year, on total operating expenses of $48 million. However, the report notes Canonsburg’s fiscal year-end data reflects the fiscal year that ended prior to June 30 and prior years reflect less than 12 months of data.

Mon Valley Hospital saw its NPR remain pat at $131 million, while its TOE also remained static at $132 million.

At Washington Hospital, NPR grew by $6 million to $230 million in FY16, while TOE grew from $218 million in FY15 to $225 million in FY16.

Washington Health System-Greene in Waynesburg, which was acquired by WHS from Essent Health Care in July 2015, saw NPR move from $14 million to $25 million in FY16, while its TOE moved from $25 million to $28 million during the same period. The report notes WHS-Greene’s prior years also reflect less than 12 months of data and balance sheet ratios are for the parent organization.

Canonsburg saw its operating margin decline by 8.05 percent in FY16, while its total margin declined 9.01 percent.

Advanced Surgical’s operating margin and total margin were 19.47 percent.

Mon Valley reported an operating margin of 1.38 percent and total margin of 2.85 percent. Washington Hospital’s operating margin was 9.02 percent, while its total margin was 0.24 percent.

WHS-Greene’s operating margin was down 6.76 percent, but its total margin was 9.28 percent.

The PHC4 report notes uncompensated care plummeted a total of 13.3 percent during FY16 on a statewide basis by $129 million, to a total of $846 million.

“The percent of statewide uncompensated care foregone revenue has fallen to 2.01 percent of the reported statewide net patient revenue for FY16,” said Joe Martin, PHC4’s executive director. “Certainly, Pennsylvania Medicaid expansion programs have played a significant role in this decrease in uncompensated care.”

However, with the exception of MVH (1.07 percent) and Advanced Surgical (0.58 percent), the other local hospitals – Canonsburg (2.90), Washington (3.84) and WHS-Greene (2.41) – were above the region’s average of 1.95 percent and the statewide average of 2.01 percent for uncompensated care.

PHC4 also noted patients who were paying for their services were doing so more quickly in FY16. On a statewide basis, the report found the amount of time the average bill remained in accounts receivable decreased two days from 47 days in FY15 to 45 days in FY16.

Most of the five local hospitals also have a higher share of NPR coming from Medicare than the statewide average of 33.86 percent, with only Advanced Surgical Care (26.72 percent) below the average.

However, all of the units, with the exception of WHS-Greene (18.96 percent), were below the Region 1 average of 13.21 percent of medical assistance share of NPR. Advanced Surgical was the low percentage leader at 0.01 percent, followed by Canonsburg (4.86), MVH (11.69) and Washington (12.78).