Financial Analysis 2006 News Release

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

OUTPATIENT SURGERY CENTERS CONTINUE TO GROW; PROFITS LEVEL OFF

Harrisburg, PA - November 30, 2007 - 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 2006 and May 2007, 28 new ASCs opened, bringing the statewide total to 232. The statewide total margin for the ASCs increased by a 0.2 percentage point, from 20.81% in Fiscal Year 2005 (FY05) to 21.02% in FY06. This represents a leveling off as the statewide total margin for ASCs increased 9.4 percentage points between FY01 and FY05 - an average of 2.3 percentage points per year.

In addition to growth in the number of these centers, the number of outpatient diagnostic and surgical procedures performed in Pennsylvania has grown by 40.2% between FY00 and FY06. More than two-thirds of that growth (70.5%) has occurred at the ASCs alone.

"Over the past six years, there has been a significant shift in the diagnostic and surgical procedures performed in Pennsylvania’s outpatient settings," stated Marc P. Volavka, PHC4’s Executive Director. "During FY06, 27.5% of these procedures were performed at ASCs - up from 10.2% in FY00."

In addition to ASCs, PHC4’s Financial Analysis 2006, Volume Two reports on the financial health of other non-General Acute Care (GAC) facilities, including long-term acute care, rehabilitation, psychiatric, and specialty hospitals.

For rehabilitation hospitals, statewide total margin increased for the fourth consecutive year to 12.88% even though the statewide operating margin fell 1.4 percentage points to 10.80%. After two years of relatively constant utilization, there was a significant decline in total patient days and discharges at both rehabilitation hospitals and GAC rehabilitation units during FY05 and FY06. Statewide patient days of rehabilitation care fell by a total of 16.7% during FY05 and FY06, and statewide discharges fell by 26.3% over the two-year period.

After a long history of negative or very small positive statewide average operating margins, the 16 psychiatric hospitals in the Commonwealth have experienced, as a group, a dramatic 9.1 percentage point improvement in the statewide operating margin - from 3.80% in FY04 to 5.31% in FY06. Driven by rising payments, the statewide operating margin increased 5.0 percentage points during FY05 and 4.1 percentage points during FY06.

Propelled by declining payments, the statewide average operating margin realized by long-term acute care (LTAC) hospitals fell nearly three percentage points, from 6.62% in FY05 to 3.72% in FY06. The average payment per discharge from all payors fell 7.3% in FY06, and recent changes to the Medicare payment system are expected to further reduce payments to LTAC facilities.

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 2006, Volume Two are free and available on the Council’s website at http://www.phc4.org/ or by calling PHC4 at 717-232-6787.