Western Pennsylvania hospital profits improving
The median profit margin for nonprofit hospitals in the nation declined for the first time in five years, credit-rating company Standard & Poor's said in a report on Wednesday.
The drop in profit from operations last year occurred because patient volumes fell as expenses increased, S&P said. The same situation squeezed profits at hospitals in Western Pennsylvania in 2013.
Industry group Hospital Council of Western Pennsylvania in May reported that average operating margin at 58 hospitals in the region was 1.81 percent last year — less than half the average operating margin of 4.44 percent in the previous year.
“We believe the sector is at a tipping point where negative forces have started to outweigh many providers' ability to implement sufficient countermeasures,” analyst Margaret McNamara said in the S&P report.
S&P, which has a negative outlook on the entire U.S. nonprofit hospital industry, said it expects the compression in operating margins to continue through this year.
But that hasn't been the case here.
Hospital networks large and small across Western Pennsylvania have showed improved results this year, countering S&P's prediction of a further squeeze on operating margins. Hospital executives have said that private insurer reimbursements have increased, and some have experienced a rebound in surgeries and greater patient volumes at outpatient centers.
The region's biggest hospital system, UPMC, experienced an 8 percent increase in revenue, an 8 percent rise in expenses and a 4 percent boost to operating profit during the January-March quarter this year, according to its most recent financial report.
Smaller systems showed the same trend of higher revenue, expenses and income, including the former West Penn Allegheny Health System, which narrowed its loss on strong revenue growth in both quarters this year. The Highmark Health-owned network has cited more higher-cost procedures and better reimbursement levels for its growing revenue.Excela Health and Butler Health both swung from losses to profits this year on higher revenue in the January-March quarter.
And St. Clair Hospital in Mt. Lebanon saw its operating profit skyrocket 47 percent as revenue shot up 5 percent on volume increases at its expanded Village Square outpatient center in Bethel Park and a Peters center opened in January.
“St. Clair continues to enhance its position as the leading provider to its service area, as well as improve its readiness for the evolving regional and national healthcare market,” the hospital said in its most recent financial report.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
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.
- Paragon Foods’ growth —and planned move — in line with local produce demand
- U.S. Steel puts 1,400 workers on notice to curb costs
- Planned Smallman Place condos in Strip District selling fast
- American Eagle closing Marshall distribution facility by July
- Union seeks labor board injunction over Wal-Mart store closings
- Hearing set on Highmark plan to put $175 million in Allegheny Health
- Frederick’s seeks bankruptcy after closing lingerie stores
- MedExpress bought by United Health Group
- ‘Significant’ fine expected against Sunoco Logistics
- Important robotic cameras used to find blockages, cross-bores in gas pipes
- Weak Appalachian coal market crimps supply chain