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Berks' two hospitals on sound fiscal footing, report says

By Matthew Nojiri, Reading Eagle, Pa.
McClatchy-Tribune Information Services

May 21--A third of Pennsylvania's hospitals did not make enough revenue from patient care and other sources to cover operating expenses in 2013.

But Berks County's two hospitals fared much better in a hospital financial report released today by the Pennsylvania Health Care Cost Containment Council.

Reading Hospital and St. Joseph Medical Center had enough space between revenues and expenditures in 2013 to be considered sustainable, according to the report.

Officials from Reading Health System and St. Joseph Regional Health Network said they believe they are in a solid financial position.

However, they cautioned that things can shift quickly in the era of health care reform, declining state reimbursements and an increase in people who need care but can't afford it.

"Everything is changing and the rules are changing," said Therese Sucher, executive vice president and chief operating officer with the Reading Health System. "The rules we play by today may not be the rules we play by six months form now."

In 2013, Reading Hospital received $778 million in revenue from patient care and had an operating margin of 9.94 percent.

Operating margin is the percentage of operating revenue left after paying the expenses of running the hospital.

St. Joseph earned $196 million from patient care and had an operating margin of 6.37 percent.

"We have to pay attention to our financial operations and we do," said St. Joseph spokesman Michael B. Jupina. "Hospitals have always been a place where we worked to treat sick people. Now we're starting to focus on wellness."

Andy Carter, president and CEO of The Hospital & Healthsystem Association of Pennsylvania, said hospitals are making changes to improve patients' health, but are also relying on investment income and philanthropy to balance their budgets.

Charity care and unpaid patient bills increased 5 percent in 2013 to more than $1 billion, according to the report. At Reading Hospital, charity care increased $10 million last year, officials said.

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The report indicated about half the hospitals in the state have financial margins that are too low to be sustainable.

The containment council says hospitals need to have a total margin -- which considers all revenue sources like trusts and investments -- above 4 percent to be sustainable.

Reading Hospital had a total margin of 9.78 percent; St. Joseph had a total margin of 6.35 percent.

Lehigh Valley Hospital had more than $1 billion in revenue from patient care but just a 1.69 percent operating margin. However, its total margin was 10.67 percent.

Daniel Ahern, senior vice president of strategy and business development with the Reading Health System, said reform is pushing hospitals to manage patients' health better, providing them "the right care at the right time in the right setting."

Part of that effort led the health system to join an alliance last year with six others in Pennsylvania and New Jersey to find ways to become more efficient and improve care.

"We're committed to remaining agile," Sucher said. "We're committed to remaining as well-informed as possible and working with the community to understand what the needs are and to fulfill those needs in a cost-effective way."

When it comes to finances, Jupina said the expansion of Medicaid is a big unknown. Gov. Tom Corbett has proposed his own plan to expand Medicaid in Pennsylvania, but it's unclear whether his proposal will come to fruition.

"I think things continue to be tentative, and you never know what's going to come down next," Jupina said. "Until Medicaid gets expanded in Pennsylvania, we're not sure what that's going to be.

"What's important to us and what's driving us is to provide that high-quality care at a low cost."

Contact Matthew Nojiri: 610-371-5062 or mnojiri@readingeagle.com.

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(c)2014 the Reading Eagle (Reading, Pa.)

Visit the Reading Eagle (Reading, Pa.) at readingeagle.com

Distributed by MCT Information Services

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