PMMC Region’s Most Profitable Hospital During 2010

POTTSTOWN PA – Pottstown Memorial Medical Center‘s operating margin – the money it earned from reimbursements for patient care and related operations – during fiscal year 2010 hit 18.08 percent, the highest among 23 general acute care hospitals operating in the Philadelphia suburbs, the Harrisburg PA-based Pennsylvania Health Care Cost Containment Council reported Friday (May 6, 2011).

PMMC as it appeared last October, lit at night in pink for National Breast Cancer Awareness Month

In addition, PMMC’s total margin for the same period, which accounts for both operating and non-operating income (such as earnings on investments), ranked fourth – at 10.63 percent – within the same 23-hospital group, the council said.

During 2010 PMMC collected $188 million in net patient revenues, according to the report, and incurred $154 million in total operating expenses, resulting in a fiscal year profit of $34 million.

The council is an independent state agency charged with addressing the cost and quality of health care in Pennsylvania. Copies of Volume One of its 2010 Financial Analysis, from which figures cited here are taken, are available free for download from the council website, here.

PMMC’s high profitability last year compares to an average 2010 operating margin of 4.36 percent among all general acute care hospitals statewide, and an average 2010 total margin of 5.26 percent statewide. Effectively, PMMC performed two- to four-times more profitably than other hospitals identified in Region 8 of the council’s report.

Of the same group, which covers Bucks, Chester, Delaware, and Montgomery counties, six hospitals were reported to have lost money and operated in the red.

Moreover, PMMC’s profitability has been constant or climbing in each of the preceding three years as well. Council statistics indicate the hospital earned $19 million in 2007 ($153 million in revenue; $134 million in expenses); $20 million in 2008 ($161 million revenue, $141 million expenses); and $34 million in 2009 ($173 million revenue, $139 million expenses). Its three-year average total margin for 2008-2010 was 10.63 percent, the council said, second only to Paoli Hospital on the Main Line for the same period.

PMMC is owned by Tennessee-based Community Health Systems (CHS), which on Monday (May 2) raised its public bid to buy Tenet Healthcare Corp. to $7.25 per share, or about $4.06 billion.

Another nearby CHS-owned facility – Phoenixville Hospital, 16 miles east in Phoenixville PA – also proved to be profitable, according to the council report, although not in the same league as Pottstown.

Phoenixville’s 2010 operating margin was 9.54 percent, ranking it fourth for that measure of profitability in the region. Its 2010 total margin was 5.54 percent, earning it seventh place. For the year Phoenixville collected $163 million in net patient revenues, and spent $149 million, for a profit of $14 million, the council report shows.

The three-year average total margin at Phoenixville was listed at 6.21 percent, also good for seventh place. Until last year, its profitability was similarly consistent to that of Pottstown. The report shows Phoenixville made $10 million in 2007, $15 million in 2008, and $17 million in 2009.

“Overall, the financial health of Pennsylvania hospitals improved primarily because of gains in the economy and the stock market,” council Executive Director Joe Martin said. “However, the cost to hospitals for providing uncompensated care continues to increase.”

Both Pottstown and Phoenixville had dramatically lower levels of uncompensated care – the amount of hospital services rendered for which no payment was made – last year than their regional counterparts, according to the report. The region’s average in the category was 2.05 percent. The highest level of 2010 uncompensated care occurred at St. Luke’s Hospital in Quakertown PA, at 4.15 percent. At the CHS-owned hospitals, by comparison, uncompensated care hit just 1.47 percent in Pottstown, and an even lower 1.18 percent in Phoenixville.