PA Hospitals Say Data in PHC4 Financial Report Misleading

HAP Warns Improvements Slight, Long-Term Crisis Still Looms



Apr 25, 2001, 01:00 ET from Hospital & Healthsystem Association of Pennsylvania

    HARRISBURG, Pa., April 25 /PRNewswire Interactive News Release/ -- The
 Hospital & Healthsystem Association of Pennsylvania (HAP) today voiced strong
 reservations about the precision and usefulness of "A Preview: Hospital
 Financial Analysis 2000," issued by the Pennsylvania Health Care Cost
 Containment Council (PHC4).
     "Even when viewed in a favorable light, this report is misleading," said
 Carolyn F. Scanlan, president and CEO of HAP.  "It gives policymakers and the
 public the impression that, overall, hospitals are in good fiscal health --
 when precisely the opposite is the case."
     "Incredibly, PHC4 has included fiscal year 1999 income data in its Medical
 Assistance calculations, without a corresponding inclusion of that year's
 costs," Scanlan said.  "The result is a gross distortion of the health of our
 hospitals in fiscal year 2000.
     "And with only 74 cents reimbursed for every dollar of care provided to
 Medical Assistance patients, Pennsylvania's Medicaid `payment-to-cost' ratio
 is ranked 41st among the 50 states."
     During the period covered by the PHC4 report, three-quarters of
 Pennsylvania's hospitals lost money on patient care.  Uncompensated care
 provided by hospitals jumped by $66 million in one year, to $896 million.  In
 addition, more hospitals (66) have negative 3-year margins than in fiscal year
 1999 (51).
     "While there were slight increases in hospitals' average margins, the
 current situation is bleak," Scanlan said.  "Total margins remain under
 4 percent, a level considered by economists to be insufficient for sustaining
 financial viability -- and operating margins are still under 1 percent."
     Scanlan pointed out that much of the improvement shown in the report is a
 result of increased Medicare payments passed by Congress in 1999 and a much
 healthier investment climate.
     "Unfortunately, the stock market has declined substantially since last
 year -- the period covered in PHC4's report -- and hospitals are now faced
 with a number of `extraordinary expense drivers' that will only make the
 situation worse," Scanlan said.  "These include workforce shortages, increased
 use and cost of pharmaceuticals, skyrocketing medical professional liability
 costs, greater investment in information technology and patient safety
 systems, and significantly higher energy costs."
     Scanlan renewed her call for Governor Tom Ridge and the General Assembly
 to include in their budget proposals increased Medical Assistance
 reimbursements to hospitals.  She warned that, if the problem continues to be
 ignored, all Pennsylvanians' continued access to health care is threatened.
     "Without adequate Medical Assistance reimbursements, hospitals cannot hire
 and retain nurses and other critically needed staff," Scanlan said.  "If there
 are not enough staff, you and your loved ones will wait longer for care.
     "Emergency departments will continue to be overwhelmed, and they will be
 forced to divert patients to other hospitals for care.
     "Hospitals will be unable to buy the most up-to-date medical technology or
 replace aging hospital buildings -- depriving patients of the best care
 available."
     Scanlan noted that the problem is neither caused by hospital
 inefficiencies nor solved by further increases in efficiencies.
     "Pennsylvania's hospitals have done their part to boost efficiency,"
 Scanlan said.  "Today, our hospitals are the second most cost-efficient in the
 nation.  But the efficiencies gained by our hospitals are reaching their
 limits.
     "The bottom line is that the financial condition of Pennsylvania's
 hospitals continues to deteriorate.  The federal government recognized the
 need and restored essential Medicare funding that had been cut by the Balanced
 Budget Act of 1997.
     "It is now past time for the state to contribute its fair share to help
 hospitals meet the needs of their communities.
     "Maintaining the status quo will not fix the problem.  We must act, and
 act quickly, to address chronic underfunding of Medical Assistance programs.
 Otherwise, our citizens will increasingly find themselves visiting hospitals
 that are understaffed, have crumbling infrastructures, and lack state-of-the-
 art medical technology."
     HAP is a statewide membership services organization that advocates for
 nearly 250 Pennsylvania acute and specialty care, primary care, subacute care,
 long-term care, home health, and hospice providers, as well as the patients
 and communities they serve.
     Additional information about HAP is available online at
 www.haponline.org/hhap.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X63147162
 
 

SOURCE Hospital & Healthsystem Association of Pennsylvania
    HARRISBURG, Pa., April 25 /PRNewswire Interactive News Release/ -- The
 Hospital & Healthsystem Association of Pennsylvania (HAP) today voiced strong
 reservations about the precision and usefulness of "A Preview: Hospital
 Financial Analysis 2000," issued by the Pennsylvania Health Care Cost
 Containment Council (PHC4).
     "Even when viewed in a favorable light, this report is misleading," said
 Carolyn F. Scanlan, president and CEO of HAP.  "It gives policymakers and the
 public the impression that, overall, hospitals are in good fiscal health --
 when precisely the opposite is the case."
     "Incredibly, PHC4 has included fiscal year 1999 income data in its Medical
 Assistance calculations, without a corresponding inclusion of that year's
 costs," Scanlan said.  "The result is a gross distortion of the health of our
 hospitals in fiscal year 2000.
     "And with only 74 cents reimbursed for every dollar of care provided to
 Medical Assistance patients, Pennsylvania's Medicaid `payment-to-cost' ratio
 is ranked 41st among the 50 states."
     During the period covered by the PHC4 report, three-quarters of
 Pennsylvania's hospitals lost money on patient care.  Uncompensated care
 provided by hospitals jumped by $66 million in one year, to $896 million.  In
 addition, more hospitals (66) have negative 3-year margins than in fiscal year
 1999 (51).
     "While there were slight increases in hospitals' average margins, the
 current situation is bleak," Scanlan said.  "Total margins remain under
 4 percent, a level considered by economists to be insufficient for sustaining
 financial viability -- and operating margins are still under 1 percent."
     Scanlan pointed out that much of the improvement shown in the report is a
 result of increased Medicare payments passed by Congress in 1999 and a much
 healthier investment climate.
     "Unfortunately, the stock market has declined substantially since last
 year -- the period covered in PHC4's report -- and hospitals are now faced
 with a number of `extraordinary expense drivers' that will only make the
 situation worse," Scanlan said.  "These include workforce shortages, increased
 use and cost of pharmaceuticals, skyrocketing medical professional liability
 costs, greater investment in information technology and patient safety
 systems, and significantly higher energy costs."
     Scanlan renewed her call for Governor Tom Ridge and the General Assembly
 to include in their budget proposals increased Medical Assistance
 reimbursements to hospitals.  She warned that, if the problem continues to be
 ignored, all Pennsylvanians' continued access to health care is threatened.
     "Without adequate Medical Assistance reimbursements, hospitals cannot hire
 and retain nurses and other critically needed staff," Scanlan said.  "If there
 are not enough staff, you and your loved ones will wait longer for care.
     "Emergency departments will continue to be overwhelmed, and they will be
 forced to divert patients to other hospitals for care.
     "Hospitals will be unable to buy the most up-to-date medical technology or
 replace aging hospital buildings -- depriving patients of the best care
 available."
     Scanlan noted that the problem is neither caused by hospital
 inefficiencies nor solved by further increases in efficiencies.
     "Pennsylvania's hospitals have done their part to boost efficiency,"
 Scanlan said.  "Today, our hospitals are the second most cost-efficient in the
 nation.  But the efficiencies gained by our hospitals are reaching their
 limits.
     "The bottom line is that the financial condition of Pennsylvania's
 hospitals continues to deteriorate.  The federal government recognized the
 need and restored essential Medicare funding that had been cut by the Balanced
 Budget Act of 1997.
     "It is now past time for the state to contribute its fair share to help
 hospitals meet the needs of their communities.
     "Maintaining the status quo will not fix the problem.  We must act, and
 act quickly, to address chronic underfunding of Medical Assistance programs.
 Otherwise, our citizens will increasingly find themselves visiting hospitals
 that are understaffed, have crumbling infrastructures, and lack state-of-the-
 art medical technology."
     HAP is a statewide membership services organization that advocates for
 nearly 250 Pennsylvania acute and specialty care, primary care, subacute care,
 long-term care, home health, and hospice providers, as well as the patients
 and communities they serve.
     Additional information about HAP is available online at
 www.haponline.org/hhap.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X63147162
 
 SOURCE  Hospital & Healthsystem Association of Pennsylvania