Financial Analysis 2005 News Release

FOR IMMEDIATE RELEASE

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

GROWTH IN NEW OUTPATIENT SURGERY CENTERS CONTINUES; UTILIZATION AND PROFITS UP

Harrisburg, PA - October 12, 2006 - The number of ambulatory (outpatient) surgery centers (ASCs) licensed in Pennsylvania continues to grow, according to a new report from the Pennsylvania Health Care Cost Containment Council (PHC4). Between June 2005 and May 2006, 25 new ASCs opened, bringing the statewide total to 202. Showing similar growth, the statewide total margin for the ASCs has increased more than two full points from 18.82% in Fiscal Year 2004 (FY04) to 20.87% in FY05. In the four years since FY01, the statewide total margin has increased a total 9.5 points.

In addition to growth in the number of centers, the number of outpatient diagnostic and surgical procedures performed in Pennsylvania has grown by 34.5% in the past five years. Almost three-fourths of that growth (73.9%) has occurred at the ASCs alone.

"Outpatient Surgery Centers in Pennsylvania continue to proliferate," stated Marc P. Volavka, Executive Director for PHC4. "Profit margins statewide have nearly doubled since FY01."

In addition to ASCs, PHC4's Financial Analysis 2005, Volume Two reports on the financial health of other non-General Acute Care facilities, including long-term acute care, rehabilitation, psychiatric, and specialty hospitals.

As a group, the rehabilitation, psychiatric and long-term acute care hospitals have all experienced record income levels over the past two years. All three sectors have benefited from the transition to prospective pay systems (PPS) by the federal Medicare program; particularly the rehabilitation and long-term acute facilities, where the majority of patients are Medicare recipients.

For rehabilitation hospitals, the average total margin is reported at 12.44%, and the 3.08% total margin indicated for psychiatric hospitals is the highest seen in at least the last ten years. After five consecutive years of negative statewide margins between FY98 and FY02, the long-term acute care hospitals as a group have posted positive total margins ranging between 5.18% and 7.76% over the past three years (FY03-FY05.)

The rehabilitation hospitals reported record income margins despite sharp declines in utilization. Total rehabilitation patient discharges from general acute care hospitals and freestanding rehabilitation hospitals fell 15.7% during FY05; patient days fell 9.1%.

The Pennsylvania Health Care Cost Containment Council 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 Pennsylvania. Copies of Financial Analysis 2005, Volume Two are free and available on the Council's website at http://www.phc4.org or by calling PHC4 at 717-232-6787.