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Pennsylvania hospitals took a financial hit from the pandemic, but Lehigh Valley hospitals fared better than most

Morning Call - 6/4/2021

Because of the COVID-19 pandemic, more than a third of Pennsylvania hospitals in fiscal year 2020 are in bad financial shape, but the major Lehigh Valley hospitals managed to close the fiscal year in the black.

In Pennsylvania, operating incomes decreased by $1.8 billion and many hospitals saw reductions in net patient revenue, according to a report released Thursday by the Pennsylvania Health Care Cost Containment Council. The change in operating margins reflects the financial impact on hospitals due to the pandemic, PHC4 Executive Director Joe Martin said.

Preparations and precautions to fight COVID-19 like testing tents, increased intensive care capacity and dedicated COVID-19 units were particularly costly for hospitals, according to a recent report by the Hospital and Health Care Association of Pennsylvania. Additionally, state and federal government orders that required hospitals to defer or cancel scheduled services and procedures to free up capacity for COVID-19 patients created revenue shortfalls at many acute care hospitals.

But the major hospitals operated by St. Luke’s University Health Network and Lehigh Valley Health Network in Lehigh and Northampton counties fared either average or better than average for fiscal year 2020, the PHC4 report shows.

Across Pennsylvania, 38% of hospitals posted a negative operating margin and 18% posted an operating margin between 0% and 4%, according to PHC4. Of the major hospitals in the Lehigh Valley, only St. Luke’s-Sacred Heart, with an operating margin of 2%, fell in the latter category. The combined operating margin for LVH-Cedar Crest and LVH-Allentown was only slightly better at about 4%. St. Luke’s-Anderson Campus and St. Luke’s University Hospital in Fountain Hill had healthy operating margins of around 20% each.

St. Luke’s main branch saw net patient revenue decrease by $5.6 million in fiscal year 2020 from the previous one, while St. Luke’s-Anderson saw a noticeable $18 million increase in net patient revenue. For the other hospitals, the year-to-year increase was around $1 million.

But all of the major hospitals in the Lehigh Valley saw increases in expenditures at some level or another, as did many Pennsylvania hospitals. St. Luke’s-Sacred Heart had a 13% increase in expenditures and at St. Luke’s-Anderson, expenditures increased by about 21%. The other Valley hospitals were comparable to the statewide average expenditure increase of about 5%.

The Lehigh Valley’s hospitals also differed from Pennsylvania as a whole when it came to money lost from uncompensated care, which is a mix of charity care and unpaid debt. From fiscal year 2019 to fiscal year 2020 money lost due to uncompensated care decreased by about 1% statewide. Total uncompensated care for the Lehigh Valley increased by about 4%.

Here are breakdowns of financial results for hospitals in the Lehigh Valley for fiscal year 2020.

LVH-Cedar Crest and Allentown

St. Luke’s University Hospital

St. Luke’s-Anderson Campus

St. Luke’s-Sacred Heart

Morning Call reporter Leif Greiss can be reached at 610-679-4028 or lgreiss@mcall.com.

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