Investment woes hurt hospitals, report indicates
Nearly half of the general hospitals reported losses.
HARRISBURG (AP) -- Unproductive investments continued to dog Pennsylvania's hospitals last year, with more institutions reporting losses even though they made more money from patient care, according to a state agency's report.
By the numbers
Overall, general hospitals brought in more money, with total income rising to $23.5 billion from $21.5 billion in 2002, according to the Pennsylvania Health Care Cost Containment Council. Profits rose to $533 million in 2003 from $484.3 million in 2002, said the state agency, which reports on the financial health and quality of hospitals and health-care services.
But 87 hospitals, nearly half of the total, lost money last year compared with 76 in 2002. Over the past three years, 38 percent of hospitals have lost money, the agency said.
In all, 182 of the state's 185 general hospitals submitted financial information for the fiscal year that ended June 30. The figures that the council released this week, which did not identify individual hospitals, come from a longer report and analysis that is due out in April.
Financial details
The hospitals are mostly keeping their heads above water because operating revenue -- which includes insurance or patient payments and receipts from services such as parking and cafeterias -- increased to $23.4 billion last year from $21.4 billion in 2002.
But investment income has dropped precipitously in the past two years to $30.5 million in 2003 from $46.5 million in 2002 and $265.6 million in 2001, a slide that the council has attributed largely to poor stock-market performance and a decline in securities values.
Because 168 of the state's 185 general hospitals are nonprofit, they rely heavily on investments and charitable donations, the agency said. With profit margins remaining thin, hospitals could have trouble finding money to improve facilities or equipment, it said.
Profit margin
The overall profit margin rose slightly to 2.3 percent from 2.2 percent in 2002, although the margins remained lower than the mid-1990s, when federal Medicare and Medicaid payments were higher.
The Hospital & amp; Healthsystem Association of Pennsylvania said that among the biggest financial challenges for hospitals right now are the cost of insurance, regulatory compliance, disaster preparedness, and caring for the uninsured. They also consider Medicaid and Medicare reimbursements to be inadequate.