PHC4 | Financial Analysis 2012 | Volume One

Financial Analysis 2012 - Volume One - News Release

Contact: Paul Hambke, Press Secretary
717-232-6787 or

PHC4 RELEASES HOSPITAL FINANCIAL INFORMATION

Harrisburg, PA - May 15, 2013 - The statewide total margin realized by the 171 General Acute Care (GAC) hospitals in Pennsylvania decreased by 1.22 percentage points, from 7.04% to 5.82%, during the fiscal year that ended June 30, 2012 (FY12), according to a report released today by the Pennsylvania Health Care Cost Containment Council (PHC4). The report also shows the value of uncompensated care—either uncollectible debt or charity care—provided by hospitals in the commonwealth grew by 6.4% in FY12, or about $62 million, to a total of $1.04 billion.

“While a number of hospitals, particularly larger facilities, experienced relatively healthy margins in Fiscal Year 2012, there are trouble spots among many of the small to mid-size hospitals in PA. In addition, the continued growth of uncompensated care, now over $1 billion annually, remains a major concern,” said Joe Martin, executive director of PHC4.

This year, uncompensated care—care hospitals provide for which they are not paid, either due to uncollectible debts or charity cases—topped $1 billion, a growth of 121% between Fiscal Year 2002 (FY02) and FY12. Uncompensated care has risen from $469 million in FY02 to $1.04 billion in FY12. During the same period, total operating revenues statewide have increased 84%.

For FY12, overall net income fell by $391 million, from $2.69 billion in FY11 to $2.30 billion in FY12. The decrease in net income resulted from a $517 million decline in non-operating income and $126 million increase in operating income. Operating income comprises patient care and a variety of related functions such as medical education, cafeteria services, parking and community health services. Non-operating income often includes such things as investment gains, trusts or endowments and contributions.

Report highlights

The 171 GAC hospitals in the analysis collectively posted an increase in operating income from $2.08 billion in FY11 to $2.21 billion in FY12. As a result, the statewide operating margin slightly increased from 5.55% in FY11 to 5.62% in FY12.
The number of hospitals with negative operating margins decreased from 46 in FY11 to 37 in FY12. In FY11, 34 hospitals posted a negative total margin. For FY12, the number dropped to 33.
The number of hospitals with a three-year average total margin in the 0% to 2% range decreased from 36 at the end of FY11 to 33 at the end of FY12.
The number of hospitals that posted a three-year average total margin above 8% rose by nine, from 28 at the end of FY11 to 37 at the end of FY12.
Net patient revenue (NPR), the revenue hospitals received for patient care only, grew 4.6% during FY12. Statewide NPR was $37.35 billion, about 95% of statewide total operating revenue during FY12.
Uncompensated care, through uncollectible debts or charity cases, grew by 6.4%, or about $62 million, from $974 million during FY11 to $1.04 billion during FY12. Because the increase in uncompensated care statewide grew at a faster rate than the 4.6% increase in statewide NPR, uncompensated care as a percent of NPR rose from 2.73% in FY11 to 2.78% in FY12.
While the number of inpatient days dropped, outpatient revenue increased from $14.59 billion statewide to $15.97 billion, representing 42.8% of total NPR in FY12.

The Volume One financial analysis of GAC hospitals is the first of three PHC4 publishes annually. Volume Two on Ambulatory Surgery Centers and Volume Three on non-GAC hospitals will be released later this year.

PHC4 is an independent state agency charged with collecting, analyzing and reporting information about the cost and quality of health care in Pennsylvania. Copies of Financial Analysis 2012, Volume One are free and available at PHC4’s website at http://www.phc4.org.