problems in the philly hospitals.
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Hospital losses keep mounting
By Karl Stark
INQUIRER STAFF WRITER
Nearly 60 percent of hospitals in Philadelphia and almost half of suburban hospitals in Southeastern
Pennsylvania lost money in 1999, according to an annual financial analysis by the Pennsylvania Health Care Cost Containment
Council released yesterday.
The cost of treating the uninsured in this region rose by nearly $50 million in one year to $412 million, the council found.
Hospital advocates cited the report as evidence that federal and state cutbacks had gone too far, and that the health-care delivery
system was moving toward a crisis.
"The level of increase in uncompensated care is staggering," the president of the Delaware Valley Healthcare Council, Andrew
Wigglesworth, said. "The bottom line has to be to underscore the need for urgent action by Congress" and Pennsylvania officials
to improve payments to hospitals.
But other observers said the area still had too many hospitals, and had not become as efficient as employers and patients wanted.
At hospitals in Southeastern Pennsylvania in 1999, nearly one in every three beds was empty.
New Jersey hospitals also had a similar rate of costly, unused beds in 1998, according to a state report. Half of New Jersey's
hospitals lost money that year, according to the most recent data available.
"We're still waiting for the health-care system to rationalize itself," said Thomas Getzen, a Temple University professor of health
management and director of the International Health Economics Association. "The American public does not want a health-care
system that is very expensive and growing 2 to 3 percent faster than everyone's wages."
Momentum appears to be building for some relief. Governor Ridge has proposed to allocate half of the money from the
forthcoming tobacco settlement for uncompensated care and a program to finance coverage for the uninsured.
"We recognize more needs to be done" for hospitals, added Charles Robbins, a spokesman for Sen. Arlen Specter (R., Pa.).
Specter and Sen. Rick Santorum (R., Pa.) are cosponsors of the American Hospital Preservation Act of 2000, which would
prevent planned Medicare cuts over the next two years, and restore $14.6 billion to hospitals nationwide over 10 years. Even its
backers have conceded that the proposed amount to be restored was a fraction of cuts that hospitals sustained from the Balanced
Budget Act of 1997.
Analysts said hospitals' fiscal distress has been growing for several years. "Health care is going through a stage of Darwinian
evolution," said Joshua Nemzoff of Nemzoff & Co., in New Hope, which advises nonprofit hospitals on mergers and acquisitions.
"The strong ones will survive, and the weak ones will go out of business."
The Pennsylvania Health Care Cost Containment Council has been compiling data on the finances of acute-care hospitals since
1989. Last year's showing tied 1991's for the worst on record, a council spokesman, Joe Martin, said yesterday. The data are
based on records for the fiscal year that ended June 30.
Forty percent of hospitals statewide lost money in 1999, even after including investment income, the report found. The losses
were greater in the Philadelphia area, where hospitals cover 48 percent of the state's uncompensated care. The Hospital of the
University of Pennsylvania, usually a lucrative earner, had $86 million in operating losses in 1999, the council found, as its parent,
the Penn health system, suffered through a record losing year. Penn executives expect the system to approach breakeven in 2000.
Brandywine Hospital had $6.6 million in operating losses last year, while Temple University Children's Medical Center fell $4
million in the red, and Chestnut Hill Hospital lost $2.5 million.
The Philadelphia statistics are missing the results of three facilities - John F. Kennedy Memorial, Kensington Hospital and Mercy
Hospital of Philadelphia - which did not file financial reports with the council.
Some hospitals managed to buck the downward trend. Lankenau Hospital had $18 million in operating profits, while Thomas
Jefferson University Hospital earned $34 million, the council found. Both are part of the Jefferson Health System.
Children's Hospital of Philadelphia made $10.7 million in 1999, the council said, while Abington Memorial Hospital had $2.8
million in operating profits last year.
Analysts cited the usual reasons for hospitals' distress. "What we're seeing is the compounded effect of managed-care, and,
particularly, Medicare, cutbacks," said Alan Zuckerman, director of Health Strategies & Solutions, a consulting firm in
Philadelphia.
Pennsylvania has also cut Medicaid rolls, and employers are increasing co-payments for health insurance. These factors have
increased the number of uninsured patients whom hospitals are compelled by law to treat in emergency cases. |
