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PHC4 Financial Analysis Shows Mixed Bag for Specialty, Non-General Acute Care Hospitals

November 21, 2018

The Pennsylvania Health Care Cost Containment Council (PHC4) this week released its fiscal year (FY) 2017 analysis for non-general acute care (GAC) hospitals in Pennsylvania. Non-GAC hospitals include specialty hospitals that address specific needs, such as orthopedics, vision and hearing, and pediatrics; long-term and rehabilitation needs; and psychiatry and behavioral health.

The November 20, 2018 report includes an analysis of fiscal data for the 76 non-GAC hospitals licensed in Pennsylvania during 2017. PHC4 found that, for this group, FY 2017 margins varied significantly by facility type. Specifically:

  • Total margins ranged from 0.78 percent for psychiatric hospitals to 11.97 percent for specialty hospitals (Total margin is the composite financial health of a facility during the year––if total margin is negative, the hospital is losing money after all sources of revenue and income have been factored in.)
     
  • Operating margins ranged from 0.70 percent for long-term acute care hospitals to 9.06 percent for rehabilitation hospitals (Operating margin reflects the percent of operating revenue remaining after all operating expenses are paid.)
     
  • The forgone dollar value of non-GAC hospitals’ uncompensated care grew by nearly $1 million, representing a 5.76 percent increase over FY 2016 figures (Uncompensated care is the ratio of charity care and bad debt to the total care provided by the hospital. Charity care is the care a hospital provides without charge because the patient is unable to compensate the hospital and bad debt is revenue lost for care when payment for services cannot be collected.)

Data released by PHC4 during May 2018, found that GAC hospitals experienced a decreased foregone dollar value associated with providing uncompensated care—which had been $761 million during FY 2017 and $844 million during FY 2016.

GAC hospitals treat patients for a brief but severe episode of illness, for conditions that are the result of disease or trauma, and during recovery from surgery. Non-GAC hospitals provide care to optimize the patient's functioning and quality of life. Pennsylvania does not have a public hospital system and its GAC facilities are open 24/7/365 and treat all patients, regardless of their ability to pay.

This report is the third and final volume in a three-part series of analyses of Pennsylvania hospitals’ financial health. These analyses underscore the importance of maintaining a financially strong hospital community. HAP will continue to advocate on behalf of hospitals and work with state and federal policymakers to find creative, bipartisan solutions to help hospitals continue to provide Pennsylvania’s families with the right care, in the right place, at the right time.

For more information, contact Sari Siegel, PhD, HAP’s vice president, health care research.

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