Jun 2, 2002 By Steve Ferris 3 min read

Frick Hospital has experienced a 1-percent rise in admissions since it became affiliated with the Westmoreland Health System in January 2001. Health system President and CEO Joseph Peluso attributed the turnaround to the increased number of clinical services that have been added since the merger.

Unfortunately for Frick, the increase in patient volume occurred halfway through the fiscal year that ended June 30, 2001, the year that was the subject of the most recent report on the financial health of Pennsylvania’s 189 general acute care hospitals.

The report by the Pennsylvania Health Care Cost Containment Council shows Frick had a negative 4.97 percent operating margin, which is the percentage of operating revenue left after operating expenses are paid, in the fiscal year.

The average operating margin among the 38 hospitals comprising the western Pennsylvania region was 2.5 percent. Brownsville General Hospital had the highest deficit among area hospitals at 5.45 percent.

Uniontown Hospital had the biggest surplus at 3.64 percent.

Peluso said decreases in reimbursement from Medicare and rising expenses are the causes of the negative numbers.

Hospitals are operating in a “toxic (third party) payer environment,” he said.

“Expenses are up,” Peluso said. “Unfortunately, reimbursement hasn’t kept pace with it. There are going to be even more hospitals losing money.”

He said 40 percent of Frick’s patients are on Medicare, and 12 percent receive Medical Assistance. Reimbursements from these payers are not enough to cover the rising costs of wages, liability insurance, drugs and technology, he said.

This inequity is also reflected in the hospital’s total margin, which is a measure of operating income and income from all sources, and its three-year average total margin.

It’s total margin for fiscal year was negative 4.22 percent, and its average total margin from 1998 through 2001 was negative 2.99 percent.

The regional average total margin was a positive 3.97 percent, and the average three-year average was a plus 3.16 percent.

However, services added since the merger and a recently started renovation project are sources of optimism for the future, Peluso said.

A blood and laboratory testing center and a woman’s health center have been opened in Connellsville.

One goal of the woman’s center is to address “an unusually high number of low-weight babies being born” in the area, Peluso said, and the center also offers services for single mothers and pregnant teens.

Beds were added to a sleep disorder center, which opened at the hospital in August, and a chest pain emergency center was established in the emergency department.

An outpatient transportation service started in July, and Frick entered into a contract with Highmark’s Community Blue insurance network.

The hospital recently began the first phase of a major renovation project.

Peluso said a former operating suite will be converted into an outpatient center with facilities for respiratory, pulmonary, breast health and nuclear medicine treatments.

The center will feature a $2.5 million echocardiograph.

This phase is expected to be finished by October or November, and the second phase, which includes renovating the lobby and entrance, will begin next March.

Peluso said that since the merger, the hospital also added 25 physicians to its staff, which now totals 175.

“Admissions are up in the first quarter this year,” Peluso said. “It’s good to see that patients are coming back to Frick.”

Before joining the Westmoreland Health System, Frick was part of the Fay-West Health System with Highlands Hospital.