Click here to subscribe today or Login.
All Luzerne County hospitals reported taking in more money than they spent in 2016, according to a new report, with Lehigh Valley-Hazleton posting the healthiest margin: 6.73 percent total revenue above total expenses.
The annual report was issued by the Pennsylvania Health Care Cost Containment Council, or PHC4, an independent agency formed to collect and analyze health care data with an eye on improving quality while controlling costs. The council releases various report volumes each year.
Volume one, “Financial Analysis,” focuses on revenue and margins for general acute care hospitals, looking at two variations of margins: operating margin, which is the percent of income remaining after operating expenses — patient care and related activities — are paid; and total margin, which adds spending and income related to other sources, such as a cafeteria.
The two margins rarely vary by much. But the council suggests total margin is generally a more accurate measure of overall financial health. For example, a hospital’s operating margin could be negative, but a healthy endowment may provide money to push the total margin into the black.
The report also notes for-profit hospitals — which includes Wilkes-Barre General, owned by Tennessee-based Commonwealth Health — must pay income tax, which PHC4 reports as a non-operating expense.
The newest data, for the 2016 fiscal year, shows hospital financial health improved modestly, with total margin statewide nudging up from 5.64 percent to 5.9 percent.
Geisinger, WB General faring well
The data is also broken down into nine regions, with region six composed of Luzerne County and eight counties to the north and east. The region six average total margin was 4.62 percent, more than a percentage point below the state average. But that was almost certainly brought down by Endless Mountains Health Systems based in Montrose, Susquehanna County, which posted a negative operating margin of about minus-14 percent.
The Guthrie Troy Community Hospital in Bradford County showed the best financial balance in the region with an operating margin topping 10 percent.
In Luzerne County, Geisinger Wyoming Valley had the second-highest margin at 5.42 percent, while Wilkes-Barre General hit 3.27 percent.
The two may present a good example of how paying income tax creates a difference between operating margin and total margin.
Geisinger, a non-profit, had an operating margin of 5.94 percent and a total margin of 5.42 percent. For-profit Wilkes-Barre General had a nearly-identical operating margin of 5.59 percent, but a substantially lower total margin of 3.27 percent.