Hospital profits decline in state 4 post earnings over $4 million

February 07, 1991|By Sue Miller | Sue Miller,Evening Sun Staff

Five Maryland hospitals, including four in the Baltimore area, earned more than $4 million in profits last year, while two hospitals, including Homewood Medical Center in Baltimore, ended up with more than $3 million in losses.

The most financially healthy hospital in the state was Sacred Heart of Cumberland, which showed a $7 million profit, beating St. Agnes Hospital, Greater Baltimore Medical Center, Johns Hopkins Hospital and St. Joseph Hospital -- all posting profits of slightly more than $4 million.

Homewood, which operates under the Johns Hopkins Hospital umbrella, reported a $3.7 million loss. Doctors' Hospital in Prince George's County was close behind, with a loss of $3.1 million.

Altogether, 19 hospitals -- 11 in the Baltimore area -- had profits that exceeded $2 million, according to yesterday's annual financial disclosure by the Health Services Cost Review Commission, the state agency that regulates hospital rates.

Despite the show of strength, hospital profits were down 14 percent, from $78.3 million in 1989 to $67 million in 1990.

"One of the reasons profits were lower in 1990 than in 1989 is that while hospital revenues increased last year by more than 10 percent, their costs increased greater than the year before," said John M. Colmers, commission executive director.

"The decline of non-operating income such as endowment and income from gifts in 1990 from the previous year also cut into the total profits."

The performance of Maryland's 54 acute-care hospitals in 1990 was "mixed -- some good and some bad things happened," Colmers said.

"Maryland's hospital cost per admission -- what was spent to provide services -- was better, but not a whole lot better, than what was going on nationally," he said. "Total profits declined, but operating profits increased and uncompensated or charity care fell slightly."

The report shows that in Maryland the average cost per admission increased 8.7 percent, from $4,115 in 1989 to $4,473 in 1990, while the national average was 8.96 percent.

In most other years, there has been a much greater difference between Maryland hospital costs and those in the rest of the country. But because of rapidly increasing costs of running hospitals, the gap between Maryland and national costs is narrowing, Colmers said.

"Over the years, Maryland hospitals have shown an ability to control their costs, but they may have to work harder at it now," he said. "In our system, hospitals are rewarded with additional monies when they are more efficient."

In 1988, hospital profits were down; in 1989 they were up and in 1990 they dropped, but not as far as in 1988, the second-worst year since 1985. However, operating profits reached $12.4 million, compared with $6.6 million in 1989.

Sinai Hospital in northwest Baltimore, which is struggling tovercome fiscal woes, posted a $2.1 million net profit despite an operating loss of $8.2 million. Endowments and special gifts helped the hospital rise above its losses.

In the last few months, the hospital has laid off 100 employees, including two hospital administrators and three hospital directors.

Other hospitals with profits exceeding $2 million were Francis Scott Key Medical Center, University of Maryland Medical Center, Harbor Medical Center, Johns Hopkins Oncology Center, Good Samaritan and Franklin Square.

In other parts of the state, other hospitals, besides Sacred Heart, with profits of more than $2 million were Memorial Hospital and Medical Center of Cumberland, Frederick Memorial, Holy Cross of Silver Spring, Peninsula General in Salisbury, Physicians Memorial in LaPlata, Suburban in Bethesda and Washington Adventist in Takoma Park.

Total charity care and bad debts rose to $271.9 million last year, reaching their highest level. When looked at as a percentage of total revenue, the report said, this represents 7.72 percent of gross patient revenue, a slight decrease from the 7.79 percent experienced in 1989.

The disclosure also showed that:

* The cost of one day in a Maryland hospital averaged $673 last year, an increase of $55 from 1989.

* Average charge per admission -- what a patient paid for his stay -- climbed to $5,048 last year, a 10.04 percent increase over 1989.

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