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PHC4 RELEASES 2016 HOSPITAL FINANCIAL REPORT – UNCOMPENSATED CARE LEVELS PLUMMET 13.3%

Harrisburg, PA - April 26, 2017 - The foregone dollar value for Pennsylvania hospital’s uncompensated care has decreased from $975 million in FY15 to $846 million in FY16. The statewide percentage of uncompensated care to net patient revenue has been steadily decreasing for the past three years. In FY14, the percentage decreased from 2.81% in FY13 to 2.78% in FY14. In FY15, it decreased from 2.78% in FY14 to 2.43% in FY15. In FY16, the percent of uncompensated care to net patient revenue dropped from 2.43% in FY15 to 2.01% in FY16.

The report shows that the foregone dollar value of uncompensated care—uncollectible debt and charity care—provided by hospitals in the Commonwealth decreased by 13.3% in FY16, or $129 million, to a total of $846 million. “The percent of statewide uncompensated care foregone revenue has fallen to 2.01% of the reported statewide net patient revenue for FY16,” said Joe Martin, executive director at PHC4. “Certainly Pennsylvania Medicaid expansion programs have played a significant role in this decrease in uncompensated care.”

The statewide total margin realized by the General Acute Care (GAC) hospitals in Pennsylvania increased by 0.26 percentage points, from 5.64% to 5.90%, and the statewide operating margin increased 0.50 percentage points from 5.44% to 5.94% during the fiscal year that ended June 30, 2016 (FY16), according to a report released today by the Pennsylvania Health Care Cost Containment Council (PHC4). The statewide operating income for Pennsylvania hospitals increased 14.2% from $2.3 billion in FY15 to $2.6 billion in FY16.

Report highlights:

• Net Patient Revenue: The revenue hospitals received for patient care increased 4.4% during FY16. Statewide net patient revenue was $42 billion during FY16, making up 95% of statewide hospital total operating revenue.
• Patient Accounts Receivable: On a statewide basis, the amount of time the average bill remained in accounts receivable decreased two days from 47 days in FY15 to 45 days in FY16.
• Operating Margin: Statewide operating income increased from $2.3 billion in FY15 to $2.6 billion in FY16. As a result, the statewide average operating margin increased from 5.44% in FY15 to 5.94% in FY16. Total operating revenue increased to $44.4 billion and operating expenses increased to $41.7 billion in FY16.
• Total Margin: The statewide total margin realized by the hospitals increased slightly by 0.26 percentage points, from 5.64% in FY15 to 5.90% in FY16.
• Uncompensated Care: The statewide percentage of uncompensated care to net patient revenue has been steadily decreasing for the past three years. In FY14, the percentage decreased from 2.81% in FY13 to 2.78% in FY14. In FY15, it decreased from 2.78% in FY14 to 2.43% in FY15. In FY16, the percent of uncompensated care to net patient revenue dropped from 2.43% in FY15 to 2.01% in FY16. The foregone dollar value for statewide uncompensated care has fallen from $975 million in FY15 to $846 million FY16.

The Volume One Financial Analysis 2016 of General Acute Care hospitals is the first of a three part series of reports PHC4 publishes annually. Volume Two, focused 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 2016, Volume One are free and available at PHC4's website at www.phc4.org.