Contact: Joe Martin
UNCOMPENSATED CARE PROVIDED BY PENNSYLVANIA HOSPITALS INCREASED 9.3% IN FISCAL YEAR 2019, ACCORDING TO A NEW PHC4 HOSPITAL FINANCIAL REPORT – FIRST INCREASE IN FIVE YEARS
Harrisburg, PA – April 15, 2020 – For the fiscal year ending June 30, 2019, Pennsylvania general acute care hospitalsâ uncompensated care (combination of bad debt and charity care) has increased in fiscal year 2019 (FY19) from $750 million in FY18 to $820 million, an increase of 9.3%, in FY19.
âThis significant change, along with meager gains in operating and total net income, comes well before the coronavirus COVID 19 crisis,â said Joe Martin, executive director for the Pennsylvania Health Care Cost Containment Council (PHC4). âMany hospitals will face serious financial challenges as Pennsylvania works to mitigate the fiscal impact of the epidemic.â
The statewide total margin realized by the hospitals in Pennsylvania increased by only 0.55 percentage points, from 6.60% in FY18 to 7.15% in FY19, and the statewide operating margin increased 1.37 percentage points from 4.74% in FY18 to 6.11% in FY19. The statewide operating income for Pennsylvania hospitals increased from $2.3 billion in FY18 to $3.1 billion in FY19.
âIn FY19, 34% of Pennsylvania hospitals posted a negative operating margin, and 29% of Pennsylvania hospitals posted an operating margin between 0% and 4%,â said Mr. Martin. â31% of Pennsylvania hospitals posted a negative total margin and 28% of Pennsylvania hospitals posted a total margin between 0% and 4%. These are troubling indicators even in good financial times.â
The operating margin represents revenue received for patient care minus related expenses. The total margin includes the operating margin plus revenue and expenses for all other facets of the acute care hospital activity. Revenue included in total margin would also factor in investment income, endowments, charitable contributions, and other revenue not directly related to patient care.
- Uncompensated Care: The statewide percentage of uncompensated care to net patient revenue increased from 1.66% in FY18 to 1.72% in FY19. The foregone dollar value for statewide uncompensated care has risen from $750 million in FY18 to $820 million in FY19.
- Net Patient Revenue: The revenue hospitals received for patient care increased 5.3% during FY19. Statewide net patient revenue was $47.7 billion during FY19, making up 94% of statewide hospital total operating revenue.
- Operating Margin: Statewide operating income increased from $2.3 billion in FY18 to $3.1 billion in FY19. As a result, the statewide average operating margin increased from 4.74% in FY18 to 6.11% in FY19. Total operating revenue increased to $50.9 billion and operating expenses increased to $47.7 billion in FY19.
- Total Margin: The statewide total margin realized by the hospitals increased slightly by 0.55 percentage points, from 6.60% in FY18 to 7.15% in FY19.
The Volume One Financial Analysis 2019 of General Acute Care hospitals is the first of a three part series of reports PHC4 publishes annually. Volume Two, focused on Ambulatory Surgery Centers and Volume Three on non-GAC hospitals, which will be released later this year.
PHC4 is an independent state agency charged with collecting, analyzing and reporting information about the cost and quality of health care in Pennsylvania. Copies of Financial Analysis 2019, Volume One are free and available from PHC4âs website at www.phc4.org.