Growing losses at Aurora Sinai raise questions about its future [Milwaukee Journal Sentinel]

It also would result in other health care systems seeing an increase in patients covered by BadgerCare Plus and other Medicaid programs, which pay far less than commercial health plans, or patients without insurance.

Aurora Sinai lost $1.1 million on revenue of $254.6 million in 2010 and $6.7 million on revenue of $254.2 million in 2009, according to information filed with the hospital association.

It had a slight profit of $419,205 on revenue of $212.2 million in 2008.

The hospital's finances took a dramatic turn for the worse last year: Aurora said the hospital is expected to report losses of $20 million for 2011 and is projected to lose $30 million this year.

Aurora blamed the roughly 18-fold increase in the hospital's net loss in one year on "the stagnant economy, an eroding payer mix and lower inpatient volumes."

No other area hospital has reported such a dramatic downturn in its operations. And why the economy would affect Aurora Sinai more than other hospitals isn't clear.

Despite Aurora's statement, the hospital's mix of payers has remained relatively stable from 2004 to 2010, according to information Aurora filed with the Wisconsin Hospital Association.

But Aurora has moved some of its cardiac services, one of the most profitable service lines for a hospital, to Aurora St. Luke's Medical Center. And more orthopedic procedures, another highly profitable service, are being done at its new hospital in Grafton instead of Aurora Sinai.

That could partly account for the drop in patients and contribute to the stunning increase in the hospital's losses.

Aurora itself had operating income of $104.2 million and net income, which includes investment and other income, of $100.4 million on revenue of $4.2 billion in 2010.

That was down from operating income of $157.5 million and net income of $223.8 million on revenue of $4 billion in 2009.

For the first nine months of 2011, it reported net income of $53.6 million on revenue of $3.2 billion.

Others are profitable

Aurora Sinai is the only hospital in its system that loses money, excluding its new hospitals in Summit and Grafton. Those hospitals are expected to lose money for the first three years they are open.

Seven of its hospitals have operating profit margins of 10%, according to its financial statement for Sept. 30, 2010. Aurora St. Luke's and its South Shore campus in Cudahy alone reported net income of $111 million on revenue of $1 billion in 2010.

Bevan Baker, commissioner of health for the City of Milwaukee, said he hopes that Aurora will work with the city in the coming year and that it ultimately will decide to keep the hospital open.

"They've done a great job historically of being a significant part of the safety net," Baker said.

But he added, "The city is waiting with optimism, and some concern, that they will arrive at this decision sooner rather than later."

Debra Standridge, president of the north market for Wheaton Franciscan Healthcare, said the community needs to know Aurora's plans for the hospital.

Closing Aurora Sinai's emergency department, for example, could result in more than 60,000 patients seeking care from Wheaton Franciscan Healthcare-St. Joseph and Columbia St. Mary's Hospital-Milwaukee.

"That's an incredible amount of business," Standridge said.

The emergency department at Wheaton Franciscan Healthcare-St. Joseph -- the busiest ER in the state -- is on track to see 80,000 patients for the fiscal year ending June 30, she said.

Roughly 47% of Wheaton Franciscan Healthcare-St. Joseph's patients are covered by Medicaid programs, and an additional 5% are uninsured.

In contrast, roughly 56% of Aurora Sinai's patients are covered by BadgerCare Plus or other Medicaid programs and an additional 5% are uninsured, according to industry data for January 2006 through June 2011.

Nonprofit health systems, Standridge said, have an obligation to provide care to people who are uninsured or covered by state health programs.

"We believe it is part of our obligation as a health system to meet the needs of the underserved communities," she said, "and we will continue to do that."

Aurora's acknowledging that it would consider closing Sinai, she said, has sparked a fair amount of speculation.

But Petasnick of Froedtert, one of Aurora's major competitors, doesn't question Aurora's contention that it is no more than speculation.

"We all have a responsibility here," he said, "and I don't see them wavering from that."

PROJECTED LOSSES

Aurora Health Care said Aurora Sinai Medical Center is expected to report losses of $20 million for 2011 and is projected to lose $30 million

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