News Release - Financial Preview 2001

FOR IMMEDIATE RELEASE

Contact: Joe Martin, Communications Director
717-232-6787 or

HOSPITAL FINANCIAL PICTURE CONTINUES TO IMPROVE IN PA

Harrisburg, PA - March 5, 2002 - The overall financial health of Pennsylvania’s 189 general acute care hospitals showed continued improvement in Fiscal Year 2001, with operating and total income margins rising to their highest levels in four years, according to new figures released today by the PA Health Care Cost Containment Council (PHC4). Total margins increased from 3.2% to 3.4 % and operating margins rose from 0.9% to 2.1%. Fiscal Year 2001 runs from July 1, 2000 through June 30, 2001.

“Hospitals did a good job in keeping their growth in expenses below the growth in revenue,” stated Marc P. Volavka, Executive Director of PHC4. “The decline in non-operating income such as investments was not unexpected given the state of the stock market, however, this decrease was offset by substantial growth in operating income.”

Despite these gains, 62 hospitals still lost money in FY01 (slightly fewer than FY00) and the number of hospitals with negative 3 year margins remained constant. For these individual hospitals, there is still cause for concern.

Mr. Volavka noted however, that the gains appeared to be broad based. The 70% of the hospitals in the “middle ground” in FY01 had higher total margins than the 70% middle ground hospitals in FY00, while the 25% with the highest total margins in FY00 saw declines in FY01. This overall statewide revenue increase does not appear to be a case of “the rich getting richer”.

“Net patient revenue - money paid to hospitals for patient care - rose by $1 billion last year,” noted Mr. Volavka. “At the same time, while uncompensated care dollars rose again this year, uncompensated care as a percent of net patient revenue declined from 5.03% in FY00 to 4.93% in FY01.” (Uncompensated care is the total of charity care provided by hospitals and bad debt.)

The numbers released today are aggregate statewide numbers. The full Hospital Financial Analysis, containing financial measures specific to all general acute care hospitals in Pennsylvania, will be released in late April.