Pennsylvania hospitals showing big financial surpluses, especially in Lancaster County
The reason remains a mystery as statewide, average hospital margins have trended in the 4 to 6 percent range.
Lancaster General Hospital was slightly below its 2007 margin but still sitting high at 14 percent in 2017. Credit: Google Street View
For hospitals, it generally takes an operating surplus of 4 to 6 percent to maintain financial stability over time. In Lancaster County, Pennsylvania, even nonprofit hospitals are far exceeding that into the double digits, continuing a pattern of big financial surpluses there, although the cause remains a mystery.
A report from the Pennsylvania Health Care Cost Containment Council shows that for most of these hospitals, the high margins are a long-term trend. Since 2007, most hospitals have steadily increased or maintained their margins through 2017.
Only Wellspan Ephrata Community Hospital showed slight declines over that time, dipping below the average 5 percent margin needed to stay comfortable, resting at about a 0 percent margin in 2017.
Lancaster General Hospital was slightly below its 2007 margins in 2017, but was still sitting at an extremely healthy 14 percent. Penn State Health's Milton S. Hershey Medical Center showed steady growth and now has about an 11 percent margin.
Heart of Lancaster Regional Medical Center showed the most dramatic growth over the 10-year span. In 2007, its operating margin was an ugly minus-9 percent. In 2017, it was a positive 13 percent. Lancaster Regional Medical Center also experienced a dramatic turnaround, going from minus-1 percent in 2007 to a positive 11 percent last year.
Unfortunately, the research did not examine possible causes for the strong performance in Lancaster County. The numbers are an aberration even in the State of Pennsylvania. Statewide, average hospital margins have trended in that healthy 4 to 6 percent range. Lancaster County likely drives that average up, though, as 37 percent of the state's hospitals lost money on operations last year.
Nonprofit hospitals are required to use the surplus for community benefit purposes, the report said.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
