PA hospitals boost finances through non-operating income

Pennsylvania's 173 hospitals reported a slight bump upward in net income, even though operating income was down by a significant margin.

Operating income for hospitals dropped to $1.8 billion in 2013, down from $2.2 billion in 2012, according to a report by the Pennsylvania Health Care Cost Containment Council. However, non-operating income--mostly investments--increased from about $100 million in 2012 to more than $500 million last year. As a result, total net income increased to $2.4 billion last year, up from $2.3 billion in 2012.

Meanwhile, uncompensated care costs increased 5.4 percent, reaching $1.04 billion in 2013, up from $989 million in 2012. Pennsylvania is one of two dozen states that have not expanded Medicaid eligibility under the Affordable Care Act, which drives many facilities to freeze hiring and cut back on capital projects.

"The continued growth of uncompensated care is a sign that too many patients lack access to affordable health coverage," said Andy Carter, chief executive officer of the Hospital and Healthsystem Association of Pennsylvania told the Allentown Morning Call. "They may delay seeking care until health problems become crises that require more intensive, expensive treatment." Carter also voiced support for enacting Medicaid expansion.

The effect of the changes in hospital bottom lines was uneven throughout the state. In Philadelphia, 13 of 19 hospitals posted a surplus or profit last year, and a similar percentage--16 of 24 hospitals--in the suburban regions were also in the black, the Philadelphia Business Journal reported.

In the more rural Lehigh Valley, all of the region's six hospitals had positive cash flow or a profit, Lehigh Valley Live reported.

However, some facilities fared better than others. Two of the hospitals in the Lehigh Valley Health Network posted just a 1.69 percent margin combined, although its facility in Muhlenberg posted healthier numbers, according to the Allentown Morning Call. But hospitals within St. Luke's University Health Network reported margins ranging from more than 8 percent to more than 19 percent.

To learn more:
- here's the report (.pdf)
- read the Philadelphia Business Journal article
- here's the Lehigh Valley Live article
- check out the Allentown Morning Call article