Wednesday, January 12, 2005

Report on the Financial Outlook for West Virginia Acute Care Hospitals

An article appearing in the January 12, 2004 Charleston Gazette reported that less than one-half of the acute care hospitals in West Virignia are profitable. The article reported that only four hospitals had operating margins of 5 percent or better.

The information came from a report made by Sonia Chambers, Chair of the West Virginia Health Care Authority to the Legislative Oversight Commission on Health and Human Rescources Accountability.

Below is a copy of the article from the Charleston Gazette's website edition.

January 12, 2005
Hospitals get bleak forecast
By Phil Kabler
Staff writer

Fewer than half of all acute-care hospitals in the state are profitable, and the financial outlook for the industry is getting worse, the chairwoman of the state Health Care Authority told legislators Tuesday.

“There are a number of facilities in West Virginia that are starting to have serious financial difficulties,” Sonia Chambers told the Legislative Oversight Commission on Health and Human Resources Accountability.

For 2003, the most recent year available, only 19 of the state’s 41 acute-care hospitals reported a profit, according the HCA report.

Of those, only four had operating margins of 5 percent or better, topped by Greenbrier Valley Hospital at 9.3 percent, she said.

For the remaining 22 hospitals, operating losses ranged from 0.2 percent to nearly 23 percent at Welch Community Hospital.

“The financial outlook continues to slide,” Chambers said. “A number of West Virginia hospitals do not have the financial reserves to continue to sustain losses.”

She said hospital expenses increased only 6.6 percent in 2003, but said patient revenue has declined as underinsured or uninsured patients have increased.

Chambers said a particular concern is the increasing numbers of uninsured West Virginians between the ages of 50 and 64, who lost their health insurance coverage through company bankruptcy or downsizing.

Hospitals also had to write off as uncollectible about $400 million in charity care and bad debts in 2003.

The amount of uncompensated care — 6.2 percent of all patients — was roughly unchanged from 2002, Chambers said.

Steven Summer, director of the West Virginia Hospital Association, said the authority’s report reaffirms what the hospital industry has been saying for some time.

“The bottom line is, most hospitals can’t survive on income from patient care,” he said. “The biggest challenge we face is the growing population of people with non-commercial insurance.”

He said a significant percentage of West Virginians are insured through government-operated plans, such as Medicare, Medicaid, and the Public Employees Insurance Agency, which he said set low reimbursement rates for health-care services.

Closure or consolidation of hospitals would have a serious impact on the state, and not just on the quality of health care, Chambers noted.

Hospitals are a significant force in the state’s economy, the authority’s report found, accounting for 36,411 full-time jobs and a payroll of $1.8 billion in 2003.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.

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