News Release - Non-General Acute Care Facilities Volume Two

FOR IMMEDIATE RELEASE

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

NEW REPORT SHOWS CONTINUED FINANCIAL IMPROVEMENT FOR SPECIALITY HOSPITALS AND AMBI-SURGE CENTERS

Harrisburg, PA - August 28, 2002 - The financial health of Pennsylvania’s Non-General Acute Care hospitals and ambulatory surgical centers improved during Fiscal Year 2001 (FY01), according to a new report released by the Pennsylvania Health Care Cost Containment Council (PHC4). The average operating margin for freestanding rehabilitation hospitals increased 2.5 points to 7.9% and while freestanding psychiatric hospitals improved 2.2 points, they were still averaging only a negative 1.02% operating margin. Furthermore, the average operating margins for long-term acute care facilities that went two or more years without an organizational change also saw improvements. PHC4’s Financial Analysis 2001, Volume 2, examines the finances of PA’s Non-General Acute Care hospitals including rehab, psychiatric, long-term acute, and specialty facilities, as well as ambulatory surgery centers.

“Overall, revenues grew faster than expenses - a trend similar to what we observed with General Acute Care Hospitals for fiscal year 2001,” stated Marc P. Volavka, Executive Director of PHC4. “Although the average operating margin for ambulatory surgery centers fell in FY01, it was primarily because of the relatively large number of new facilities that opened - 14 in FY01 and 39 since FY95. For the 57 surgery centers that operated for two or more years, average operating margin increased 2.6 points, from 12.0% to 14.6%.”

Despite this rapid growth in the number of surgery centers, visits to ambulatory surgery centers represent less than one percent (about 0.9%) of all outpatient visits to licensed hospitals and surgery centers. Non-General Acute Care facilities account for only a small portion of the hospital industry, representing 6.11% of the total Net Patient Revenue (NPR), 11.27% of staffed beds, 12.18% of patient days and 4.7% of hospital discharges.

Inpatient rehabilitation discharges increased 7% during FY01. Outpatient visits increased 20% during FY01 and 110% between FY96 and FY01. Furthermore, as a group, freestanding rehabilitation hospitals and the rehabilitation units of GAC hospitals experienced a 20.5% growth in discharges over the past two years and an increase of 56.5% since the end of FY94. At the same time, the trend toward shorter lengths of stay at rehabilitation hospitals continued in 2001, as the average stay declined about a half day during FY01 and nearly five days since FY94.

While long-term acute care hospitals are a relatively new sector in Pennsylvania’s health care delivery system - growing from only one facility in FY94 to 14 facilities in FY01, the number of patients receiving care at these facilities grew dramatically, growing 27.1% during FY01 alone.

In regards to psychiatric care, after two years of sharp increases in the number of patients receiving inpatient care, the number of patient discharges leveled off during FY01. During the two-year period between FY99 and FY00, psychiatric discharges grew over 13.2%; however, the increase during FY01 was only 0.3%. The Commonwealth, through the Department of Welfare, is the largest provider of psychiatric care in PA, providing about 40% of all inpatient psychiatric care through its nine state hospitals. While the average operating margin for the 19 freestanding psychiatric hospitals improved, these hospitals as a group have not had a positive operating margin since FY94.

The PA Health Care Cost Containment Council is an independent state agency charged with addressing the cost and quality of health care in Pennsylvania. Free copies of this report can be ordered by calling 717-232-6787 or can be downloaded from the PHC4 website at http://www.phc4.org.