The results of a financial analysis released this week show 35 percent of 169 acute-care hospitals studied in Pennsylvania had a negative operating margin in fiscal year 2013.
That figure was 50 percent in Washington and Greene counties.
Pennsylvania Health Care Cost Containment Council issued its annual financial report Wednesday. Its figures indicate costs exceeded revenues at Canonsburg Hospital and Southwest Regional Medical Center in Waynesburg, but that Washington and Monongahela Valley hospitals finished the fiscal year on the positive side.
Negative operating margins, PHC4 said, mean hospitals need other sources, “including investments and fundraising, to balance budgets.”
Joe Martin, executive director of PHC4, cited lower reimbursement payments for government programs such as Medicaid and Medicare as a factor in the negative margins.
He said, “Hospitals dependent on income sources they do not control are in the challenging position of relying on a volatile stock market and charitable giving or finding other revenue sources to remain fiscally healthy.”
Hospitals in Greene and Washington were included in Region 1 of the analysis, along with those in Armstrong, Beaver, Butler, Fayette and Westmoreland counties.
Washington Hospital fared well in Region 1, with a 4.31 percent operating margin – sixth best of 29 hospitals.
Gary Weinstein, president and chief executive officer of Washington Hospital, could not be reached for comment.
Mon Valley Hospital, in Carroll Township, was a positive 0.45 percent. President and CEO Louis J. Panza Jr., said, “Hospitals face mounting financial pressures due to pension obligations, the cost of implementing national health reforms and impending cuts in Medicare payments that are resulting from the federal deficit reduction.
“When one out of every two people to whom we provide medical care is on Medicare, the federal government’s cutbacks in reimbursements are making it more difficult for our hospital to sustain the financial stability necessary to staff our workforce and invest in technology.”
Magee-Womens Hospital of UPMC (13.0 percent) had the highest positive margin; St. Clair Hospital in Mt. Lebanon was third (5.63).
Canonsburg Hospital and Southwest Regional, respectively, had the fourth and fifth biggest losses in the region. Canonsburg’s deficit was 7.59 percent; Southwest’s was 7.31.
Dan Laurent, media relations director for Allegheny Health Network, parent of Canonsburg Hospital, said, “The financial challenges of the … (system), including Canonsburg, for the time period covered by the report further underscore the importance of our affiliation with Highmark and the formation of the Allegheny Health Network one year ago. … An aggressive turnaround plan has been implemented across the network … that is already significantly improving our financial position. We expect future PHC4 financial reporting to reflect those efforts.
“We are also making significant investments in programs and facilities designed to expand the scope and quality of the services we offer,” he added. “Some examples at Canonsburg include the recent additions of Dr. Blair Jobe’s nationally recognized Esophageal and Thoracic Disease Institute and the expansion of the hospital’s neurosurgical and orthopedic capabilities.”
Joy Eggleston, senior public affairs officer at Southwest Regional, said, “2013 was a time of tremendous change for the entire health care industry. There have been many cuts to hospitals, which have contributed to Southwest Regional Medical Center’s significant decline in net operating revenue.
“As a result, we made many changes, which have since resulted in forward momentum. Because of these changes, we feel much more confident about our financial well-being and future.”