After five straight years of shrinking “profits,” Lancaster County’s biggest nonprofit hospital turned things around last year — due in large part to cost cutting.
Lancaster General Hospital’s surplus, or revenues over expenses, ballooned to $92.6 million in 2012-2013, up 54 percent from the previous year and the highest total since 2007-2008, according to the hospital’s IRS Form 990, released earlier this summer.
The hospital’s parent firm, Lancaster General Health, inched closer to becoming a billion-dollar organization in 2012-2013, with total revenues of $919.8 million and a surplus of $100.7 million.
The county’s other nonprofit hospital, WellSpan Ephrata Community Hospital, saw its surplus fall to $693,250 — down from $6.45 million the year before. Hospital spokesman Brett Marcy said this was due to a boost in contributions to its Northern Lancaster County Medical Group “to compensate for the medical group's negative financial performance.” In 2011-2012, the hospital provided the group with $6 million; last year that figure rose to $10.7 million.
At Lancaster General, the results can be seen as validation of a comprehensive program begun in 2011 to slash expenses by mid-2013, in response to health care reform, falling government reimbursements and what hospital officials have called a “dramatic” surge in patients without insurance who can’t pay their bills.
Despite the rebound in the hospital’s surplus, Lancaster General Health's executive vice president and chief financial officer, Dennis Roemer, said fiscal challenges persist. “Our population (in Lancaster County) is growing older, needing more care from us at a time when government resources to pay for that care are shrinking, not expanding,” Roemer said.
In fact, revenues at Lancaster General Hospital were down, to $827.1 million from $857.3 million the year before. It’s just that total expenditures fell even further, from $797 million to $734.5 million.
Roemer said the cuts came as a result of lower contributions to LGH’s pension plan — made possible by higher investment returns — and nearly $40 million in reduced expenses “achieved through improved efficiency while maintaining high quality and patient safety.”
“Lancaster General Hospital” consists of the downtown hospital, Women & Babies Hospital, Lancaster General Health Columbia Center, Lancaster General Imaging Corp. and Lancaster General Ambulatory Services. The hospital is by far the largest component of parent firm Lancaster General Health, generating 90 percent of all system revenues.
The health system, which at the end of 2013 had 4,215 full-time employees and 3,086 part-time employees, is the biggest employer and one of the biggest economic entities in Lancaster County.
Financial results reported on the hospitals’ Form 990 differ slightly from those reported earlier this summer by the Pennsylvania Health Care Cost Containment Council, and include more details, such as a breakdown of highest-paid employees.
At Lancaster General Hospital, salaries and other compensation fell to $398.7 million from $417 million the year before. Lancaster General Health Chief Financial Officer Dennis Roemer said this was because pension outlays were less, due to better-than-expected investment returns.
Employee compensation accounted for 54 percent of all Lancaster General Hospital expenditures in 2012-2013.
The top-paid Lancaster General executive was President and CEO Tom Beeman, who saw his overall compensation rise last year to $1.29 million, up from $966,945 the year before. That figure included base compensation of $740,998, bonuses and incentives totaling $341,264 and retirement and other deferred compensation of $171,551.
Two employees earned more than $800,000: Norma J. Ferdinand, senior vice president/chief quality officer, earned total compensation of $851,387, while Jan Bergen, executive vice president Lancaster General Health/president, earned $836,462.
Another eight earned more than $500,000.
At Ephrata Community Hospital, CEO John M. Porter Jr. was the highest-compensated employee, with total compensation of $634,648. Just one other employee, Medical Director Dr. Peter D. Cote, earned more than $500,000.
Lancaster General Hospital reported providing $95.1 million in charity care, unreimbursed Medicaid expenses and other “community benefits,” up from $92.9 million the year before. That included $11 million in uncompensated care and $67 million in under-compensated care, said CFO Roemer.
The hospital also wrote off $38.7 million in bad debt, basically bills it never expects to be paid. That was up from $33.5 million last year, and the fourth year in a row the figure increased.
Wellspan Ephrata reported $11.1 million in “community benefits” and $6.95 million in bad debt.
Grants and other financial assistance to area governments and other organizations fell for the second straight year, from $3.7 million in 2011-2012 to $3.5 million last year. The biggest recipients:
- School District of Lancaster, a payment in lieu of taxes, or PILOT payment, $1.5 million.
- City of Lancaster, PILOT of $1.4 million.
- James Street Improvement District, $160,000.
- United Way of Lancaster County, $97,000.
- Lancaster County Medical Foundation, $75,000.