Revenue growth strong in some local hospitals, nearly non-existent in others

Holy Redeemer president and CEO Michael B. Laign (left) and Abington Health president and CEO Laurence M. Merlis. Both hospitals reported flat revenues.
Holy Redeemer president and CEO Michael B. Laign (left) and Abington Health president and CEO Laurence M. Merlis. Both hospitals reported flat revenues. (MICHAEL S. WIRTZ / Staff Photographer)
Posted: October 04, 2012

Revenue growth at area health systems was uneven in the fiscal year ended June 30, with the biggest systems showing strong gains while smaller competitors scraped out, at best, meager increases.

Revenues from patients at Holy Redeemer Health System in Meadowbrook, for example, have been nearly flat since 2009. They were $336 million in the year ended June 30. That was $2 million more than in 2009 and $3.5 million less than in 2011.

At Montgomery County neighbor Abington Health, patient revenues have been stuck at about $760 million for three years in a row, reflecting a widespread challenge that hospital executives attribute to changing medical-treatment methods and the weak economy.

At the University of Pennsylvania Health System, by contrast, revenue has climbed at an average annual growth rate of 6.41 percent since 2009, to reach $3.37 billion in the 12 months ended June 30.

Ralph Muller, chief executive of Penn's health system, which includes the Hospital of the University of Pennsylvania, Penn Presbyterian Medical Center, and Pennsylvania Hospital, said demand is higher for the more complex care provided there.

"The kind of work we do - cancer care, transplants, high-risk births, heart failure - will be less affected by the economy," Muller said in an interview Tuesday.

Penn has also benefited from the long-term trend toward outpatient care. "What might have filled up a community hospital 20 years ago is now done on an outpatient basis," Muller said.

Penn is among six health systems in Southeastern Pennsylvania that have reported financial results for the year ended June 30 in bond disclosures. In addition, Jefferson Health System, which includes Main Line Health, provided results that have been audited but not officially released.

In the five-county region, 190,800 people, or 11.4 percent of the workforce, worked at a hospital or an outpatient facility, including doctors' offices.

The fiscal year for New Jersey hospitals overlaps with the calendar year. That is also the case for hospitals that are Catholic Health East, such as St. Mary Medical Center in Langhorne.

In keeping with the tendency for the bigger health systems in the Philadelphia region to post stronger financials, Jefferson has seen its patient revenue climb by an average of 6.15 percent since 2009, to $2.92 billion.

David F. Simon, Jefferson's executive vice president and chief legal officer, attributed the system's steady growth to patient demand driven by a "reputation for quality care."

"Of course, having distinguished physicians working with and at your hospitals is perhaps the most important factor in bringing patients to your door," Simon said.

That's a key part of the strategy the Temple University Health System is pursuing under CEO Larry Kaiser. The system has been adding "world-class physicians who, in many cases, provide services not otherwise available in the region," spokeswoman Rebecca Harmon said.

No one at Abington was available for comment Tuesday afternoon.

Holy Redeemer, which attempted to merge with Abington last summer, said in a statement that it "has maintained a stable net-patient revenue for the past three years through sound fiscal management" and has added "physician leaders, practices, and facilities" to grow revenue.


Hospital Revenue Growth

Smaller health systems in Southeastern Pennsylvania are having a hard time increasing revenues, shown here for the year ended June 30, 2012, in billions of dollars.    

                         2012              Avg. growth

System                Patient revenue          since 2009

Univ. of Penn.               $3.37                   6.41%

Jefferson Health*             2.92                     6.15

Einstein Health**             0.99                     6.46

Temple University             0.96                     1.93

Crozer-Keystone             0.81                   -0.35

Abington                   0.76                     1.45

Holy Redeemer             0.34                     0.21

*Jefferson's fiscal 2012 results remain subject to board approval.

**Einstein's results reflect the addition of the Montgomery Health System for a full year in 2012. Excluding Montgomery, the average gain would have been 2.71 percent.

SOURCES: The health systems


Contact Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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