Archdiocese shows operating profit at nursing homes

The Archdiocese of Philadelphia has agreed to lease its 13 cemeteries to a Levittown company for a total payment of $89 million over 35 years, officials announced Thursday. We photograph the SS Peter and Paul Cemetery at 1600 S. Sproul Road, Springfield, Delco, on Sept. 26, 2013. Various scenes from the cemetery. ( CLEM MURRAY / Staff Photographer )
The Archdiocese of Philadelphia has agreed to lease its 13 cemeteries to a Levittown company for a total payment of $89 million over 35 years, officials announced Thursday. We photograph the SS Peter and Paul Cemetery at 1600 S. Sproul Road, Springfield, Delco, on Sept. 26, 2013. Various scenes from the cemetery. ( CLEM MURRAY / Staff Photographer )
Posted: March 16, 2014

The Archdiocese of Philadelphia delivered some relatively positive financial news Friday.

Catholic Health Care Services, for example, which operates six nursing homes and a retirement home, had an operating profit of $3.9 million in the year ended June 30.

Results at the facilities, which have been for sale since the summer, improved significantly from a loss of $497,454 the previous year, according to an audited financial statement released Friday.

The nursing-home report was one of 16 published by the archdiocese, covering the Catholic Church's diverse operations locally, including cemeteries, high schools, and homes for the disabled.

In aggregate, the tax-exempt organizations recorded a 4.9 percent gain in revenue, to $436.5 million from $416.2 million. Meanwhile, expenses rose just 1 percent, which helped reduce overall operating losses and was another sign that the archdiocese was focused on bringing expenses in line with revenue.

The archdiocese provided a narrative to explain some of the results. But chief financial officer Timothy O'Shaughnessy, who has spearheaded the financial restructuring of the archdiocese, was not available for an interview.

With $137 million in revenue, Catholic Health Care Services, founded in 1913, is the biggest archdiocesan entity. Its 1,215 skilled-nursing beds made it the nation's seventh-largest nonprofit nursing-home group last year, according to LeadingAge Ziegler, a report on the industry.

An archdiocesan official said a sale of the nursing homes was still being considered, but industry sources said they had heard only the vaguest of rumors about potential buyers.

Along with the pending lease of 13 archdiocesan cemeteries to a for-profit company for $89 million, money from selling the nursing homes could provide relief for big financial gaps faced locally by the church.

A condition of any nursing-home sale would be the retention of current residents, regardless of their ability to pay, the archdiocese said in the summer.

The nursing homes provided $751,444 in charity in fiscal 2013, the equivalent of 10 nonpaying patients for the entire year at Medicaid rates. That was up 12.5 percent from $667,697 in 2012, the audit said.

Steve Monroe, an expert in the senior-living market, said it was difficult to say how much the archdiocese's nursing homes could fetch, because such deals were usually dependent on how much potential a buyer saw.

"If they are going to put a lot of restrictions on them, that's going to turn a lot of people off," said Monroe, editor of the trade newsletter SeniorCare Investor.

Seventeen high schools, managed since September 2012 by the independent Faith in the Future Foundation, are also a major revenue unit for the archdiocese.

Net tuition and fees fell 3 percent, to $94 million from $97 million, as enrollment declined 6 percent to 14,205, from 15,172. But thanks to fund-raising and other contributions, core unrestricted operating income - excluding depreciation and investment swings - rose to about $1 million from $484,000.

The Catholic Social Services unit provides residential services to another set of young people, those who have gotten in trouble with the law or have other difficulties, but those operations struggled because of "static governmental reimbursements and underutilization," the archdiocese said.

One of those units, the St. Vincent's Orphans' Asylum of Tacony, which provided residential, maternity, and mother/baby programs to adolescents in five group homes, was merged in July into St. Francis-St. Joseph Homes for Children, another Catholic Social Services unit. That eliminated 22 jobs.

Another component of youth services is the St. Gabriel's System, which serves young people who have been in the juvenile-justice system.

Altogether, youth services had operating losses of $5 million on $39.6 million in revenue, reports show.


hbrubaker@phillynews.com

215-854-4651

@InqBrubaker

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