Jun 2, 2002 By Steve Ferris 4 min read

BROWNSVILLE – Robert Korcheck is frustrated. A member of Brownsville General Hospital’s board of directors, Korcheck said that despite recent improvements at the facility, Brownsville area residents still prefer to seek treatment at other hospitals.

“We’re not getting our share of patients from the Brownsville area,” said Korcheck. “Just a few more patients out of the area and we’ll turn the corner. We’ve got a good hold on expenses.”

“Expenses have been contained at the current level for five years,” added Sara Poling, the hospital’s chief executive officer. “That’s remarkable, admirable.”

But while the hospital has been able to control expenses, its income continues to lag, resulting in an operating margin deficit of 5.48 percent last year, according to the Pennsylvania Health Care Cost Containment Council’s annual financial analysis, which covered July 1, 2000, to June 30, 2001.

Marc P. Volavka, executive director of the council, said that while the financial status of most hospitals across the state showed improvement last year, a minority like Brownsville continued to lose money.

“Fully one-third of Pennsylvania hospitals lost money last fiscal year,’ said Volavka.

The council defines operating margin as the revenue left after all expenses have been paid. It notes that a deficit shows that revenues aren’t covering costs.

The average operating margin for the western Pennsylvania region last year was 2.5 percent. Brownsville had highest deficit of any hospital in the area and had the sixth-highest deficit among the 38 hospitals in the region. The only other local hospital with a negative operating margin was Frick Hospital in Mount Pleasant, at negative 4.97 percent.

Uniontown was tops among local hospitals at 3.46 percent, followed by Greene County Memorial Hospital in Waynesburg at 1.29 percent, Highlands Hospital in Connellsville at .48 percent and Monongahela Valley Hospital in Washington County at .24 percent.

In addition to blaming the tendency of Brownsville area residents to travel for health care, hospital officials blasted reimbursement rate cuts for Medicare and Medicaid.

“The Balanced Budget Act of 1997 didn’t help us at all,” Korcheck said. “It was the start of our downfall. Sixty-five percent of our patients are senior citizens, and the Medicare reimbursement rate was cut.”

BGH also reported a negative 3.86 percent total margin for last year and a negative 4.04 percent total margin for the past three years. Total margin is the money left after revenue is added from all other sources, including investments and trust income.

For the western Pennsylvania region, the average total margin was 3.97 percent, and the average three-year total margin was 3.16 percent.

Citing industry studies, several hospital administrators said an operating margin of at least 5 percent is needed to reinvest in facilities and equipment.

The council noted that it doesn’t appear that BGH can continue “to sustain current losses for an extended period of time.’

It noted that the improvement in the hospital’s total margin last year was due to a 6.5 percent increase in revenues and no increase in expenses.

Poling said investments have allowed the hospital to soften some of the impact of its operating losses, but she said she was unsure how long the hospital could remain open without a turnaround in patient volume.

“We are not seeking or are we so inclined (to close, merge or sell),” Poling said. “It’s not in the works. We’re not actively soliciting partnerships or mergers.”

“We’d still like to remain an independent hospital as long as we can,” Korcheck said. “I believe that is the opinion of the board. We made money the last three months.”

BGH opened a physical rehabilitation unit last summer and is planning to open units specializing in wound care and chest pain.

Women’s services units for mammography and osteoporosis treatment also are planned for this year, Poling said.

She said the goal of those offerings and others that are part of a strategic plan is to serve more residents in the Brownsville area.

Other ventures listed in the strategic plan include units specializing in comprehensive cancer care, digestion disorders, geriatric psychology, urology, asthma and joint replacement and expansion of the hospital’s diabetes management program.

These units would serve the area’s high senior citizen population and could lead to the establishment of a geriatric institute, she said.

“The whole intent is to meet the demands of the market,” Poling said.