Tag Archive for Susquehanna Health
Williamsport Regional to raise last beam on new patient tower
Muncy Valley Hospital’s major renovations complete
Hospitals cope with recession, uncertainty
A checkup of the financial health of our region’s hospitals exposed a number of ills. Hospital administrators wonder if health care reform can cure them…
by R. Brock Pronko, Regional Business Analyst

Dr. Jessica Shepherd, emergency room physician at Altoona Regional, reviews patient information with a colleague.
A drop in non-operating revenues, a weak bond market, and a spike in uncompensated care is causing poor financial health reports from all types of hospitals — city hospitals, teaching hospitals, and community and regional hospitals.
Hospitals use complicated formulas to calculate profits, each done separately based upon the insurance company paying the bill.
They also have to factor in variables such as DRGs (Diagnosis-Related Groups) that classify patient care into one of approximately 500 groups developed for Medicare and Medicaid reimbursements, which are often below actual costs.
Private insurers pay more, and by “cost-shifting,” hospitals use these payments to make up the losses in Medicare and Medicaid patients.
“Financing is more complicated for hospitals than for small businesses, because we can’t price a product or service based on its actual cost and desired mark-up, and we can’t raise our prices if our costs go up,” said Charles Santangelo, Executive VP and CFO, Susquehanna Health System.
The Susquehanna Health System is comprised of three hospitals: Divine Providence, Muncy Valley, and The Williamsport Hospital & Medical Center.
Williamsport Hospital has one of the 25 busiest emergency rooms in Pennsylvania, with over 55,000 ER visits per year.
Uncompensated hospital care as a percentage of total revenues increased as much as 20 percent for some hospitals, according to the American Hospital Association.
“Last year, our uncompensated care was up 9.4 percent, which was more than average for us, and for the first two months of this year, we were up 15 percent from the same period last year,” said Santangelo.
“If health care reform can’t lower premiums for small businesses, the rise in uncompensated care for hospitals and providers will continue, because an increasing amount of uncompensated costs is due to employers trying to reduce their high health care insurance premiums by implementing high deductibles and high co-pays in their company health plans,” said Santangelo.
“This lowers the upfront cost for employees but pinches them on the backside with a greater share of utilization costs if they get sick, and it increases the responsibility of the physicians and hospitals for collecting more money from the patients at a time when they can least afford it.”
The recession has left many hospital capital expenditure projects on “life support”. While Susquehanna Health did cut some discretionary spending, it spent $13 million in capital improvement projects last year and $69 million on a multi-year project called “Project 2012”.
By 2012, Williamsport Hospital, which houses all the general acute care beds in the city of Williamsport, will have a new building called “The Patient Tower”.
The Tower will not add new beds, but the beds will be more comfortable and new single-patient private rooms will be designed with pull-out couches for relatives to stay overnight.
The 2012 project will also expand the emergency room and add a natural gas co-generation power plant.
Before the recession, Altoona Regional Health System planned to consolidate its Bon Secours campus and main campus and go to the bond market to get the funding.
“Because the bond market dried up, we had to delay many efficiencies we could have gained by consolidating, however, we received approval from the bond authority this week to go forward with the consolidation so we are seeing a thaw in the financial markets,” said Jerry Murray, president and CEO of Altoona Regional Health System.
To help cope with the recession, Altoona Regional standardized all its hospital products to get the best pricing from one vendor. It was able to cut costs about 2 ½ to 3 percent on the supply side last year, and it shaved another 2 ½ percent so far this year.
Murray doesn’t think health care reform will help hospitals if it includes a public option.
“Even if it started out as an option, eventually more and more employers would migrate over to the public plan, which would drive out private insurers because they can’t borrow billions of dollars from China to cover their losses like the government,” said Murray.
“If the public plan pays hospitals Medicaid rates or lower, it’s also going to put a lot of hospitals out of business, so the whole idea strikes me as crazy.”
Murray said that tort reform, allowing insurance companies to market products across state lines, and reigning in abuse or fraud in Medicare would do more for to reduce costs.
“If those three initiatives made a big dent, but not enough to allow most people to buy insurance, then the government could require a subsidized alternative product be offered through the private insurance companies,” said Murray.
“But this isn’t even being discussed, because in my opinion, it’s not really about health care reform, it about control. When you look at the government taking over the banks, the auto industry, and now the health care industry, you have to ask yourself where does it stop?”




