Hospital profit margins decline in Pittsburgh area
Profit margins at hospitals across the Pittsburgh region are falling as they face cuts in government reimbursements and declining patient volume.
The average margin on hospital operations last year was 5 percent, down from 6.1 percent the year before, according to a report released on Wednesday by the Pennsylvania Health Care Cost Containment Council.
The council, an independent state agency in Harrisburg, collects annual financial data on the state's hospitals, including the 27 not-for-profit medical centers in the Pittsburgh area.
“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,” Joe Martin, the council's executive director, said in a written statement.
Four hospitals in the region posted negative operating margins for the fiscal year that ended June 30, 2012, the council report shows. That's improved from the previous year, when six area hospitals had negative margins.
Ohio Valley General, a 138-bed hospital in McKees Rocks, posted a negative margin of 5.8 percent. Officials could not be reached for comment.
Heritage Valley Health System's Beaver hospital had a negative margin of 1.8 percent. Heritage Valley spokesman Dan Murphy said the system as a whole, which includes a hospital in Sewickley and other operations, recorded a 0.6 percent operating margin last year.
The Sewickley hospital had a profit margin of 4.3 percent, according to the council's report.
Two of West Penn Allegheny Health System's five hospitals — Canonsburg General and West Penn in Bloomfield — showed the two worst negative margins last year, 7.9 percent and 17.6 percent, respectively.
West Penn Allegheny spokesman Dan Laurent said the large loss at West Penn, a shortfall of $40 million between revenue and expenses, was caused by a shuttering of most of the hospital in the previous year. It was reopened in early 2012 and has been adding services, Laurent said.
“We experienced some expected operational losses during the initial start-up period as the community, EMS (emergency medical services) and referring doctors became reacquainted with the hospital,” he said.
Since then, West Penn has added specialists and opened a cardiovascular surgery area, which are bringing in more patients.
“At Canonsburg, we are also exploring opportunities to enhance and grow the services we offer at the hospital,” he said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Amusement parks fight off home entertainment threat
- S&P 500 logs 47th record high close for year
- State officials prompt UPMC, Highmark to go to mediation to resolve Medicare dispute
- Caution creeps into economic picture as consumer, business spending taper
- Retailers that won’t open on Thanksgiving hope move pays off
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Westinghouse to construct colossal nuke plant in Turkey
- BNY Mellon trader fired in conduct probe
- Butler County firm Deep Well Services tackles tough gas wells
- Lower gasoline prices fail to spur consumer spending
- Small retailers at intersection of social networks, foot traffic