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Majority of Region's Hospitals Report Operating Loss Despite Small Improvements in Financial Picture.

WARRENDALE, Pa., Nov. 7 /PRNewswire/ --

The latest survey of western Pennsylvania hospitals shows that despite upturns in some financial indicators, the majority of hospitals in western Pennsylvania are reporting a net operating loss. These indicators are part of the Flash Survey, a report released by Hospital Council of Western Pennsylvania.

The year-end report, which covers the year July 1, 2000 through June 30, 2001, represents aggregate data collected from 67 hospitals in western Pennsylvania. "Our region's hospitals have seen some modest financial relief during the past fiscal year," said Ian G. Rawson, Ph.D., president of Hospital. "However, they are faced with continuing pressure from malpractice costs, salary demands and delayed capital investments."

"Even with a gain in net operating margin this year from last year, most hospitals reported an operating loss," said Walter Wayne, senior vice president of Finance for Hospital Council. Hospitals had a net operating margin gain of 2.38%, up 2.87 percentage points from an average net operating loss of 0.49% for the same period last year, according to the Flash Survey. At the same time, only 24 hospitals in the region reported a gain while 42 hospitals reported a loss in operations.

"We can attribute our gain in operating margin primarily to two sources: the Balanced Budget Act relief passed last year and the Tobacco Settlement funds," said Rawson, president of Hospital Council. "At the same time, we recognize that this is only temporary relief."

One immediate issue all hospitals are facing is the increasing costs of medical malpractice insurance. Another issue is a forecast of significant salary increases for nurses. Overall, hospital expenses have increased to 4.0% this year compared to 1.0 percent last year.

"These increases have to do with several factors, including the rising costs of medical malpractice insurance; costs to comply with new hospital regulations, and additional costs for utilities and pharmaceuticals," Wayne said.

Another key indicator, uncompensated care, also shows that hospitals provided $266 million in uncompensated care this fiscal year compared to $260 million last fiscal year. "Western Pennsylvania hospitals continue to provide a safety net to those who are underinsured and uninsured," said Rawson.

One reason that Pennsylvania hospitals continue to struggle is due to low reimbursements from all managed care payors, including Pennsylvania's Department of Public Welfare, which provides reimbursement for hospitals to treat patients covered by medical assistance.

In the short-term, occupancy rate, admissions and patient days all showed increases. The indicators are as follows:

*Occupancy rate was 63.1%, up from 61.3%

*Admissions increased by 2.4%, up from a 0.4% increase last year

*Patient Days were up by 2.1% while last year there was a 2.1% decrease

Wayne cautions that the next quarter's financial indicators may not have a continued upswing. He noted that workforce and staffing issues continue to impact hospital expenses as well as increasing costs of medical malpractice. In addition, hospitals will face growing expenses related to capital improvements and technology costs.

Hospital Council of Western Pennsylvania is a membership organization comprised of more than 80 healthcare organizations in a 30-county area in western Pennsylvania. Hospital Council is a key data, strategic planning and advocacy resource for the region's acute and specialty hospitals, long-term care facilities and rehabilitation centers.

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Publication:PR Newswire
Date:Nov 7, 2001
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