Bradford Regional Medical Center’s financial future is looking
bright, but officials are being cautious before doing much
celebrating.

On Wednesday, the hospital released a statement on the heels of
a report from the Pennsylvania Health Care Cost Containment
Council, which reported on the financial status of the state’s 176
general acute care hospitals.

The news from BRMC was hopeful – the hospital reported that BRMC
isn’t among the 25 percent of hospitals that lost money in 2005.
Statewide, the operating margins for general acute care hospitals
grew more than a full point in fiscal year 2005, from 3.22 to 4.61
percent.

At BRMC, the net income margin for the year was 2.9 percent.
However, BRMC Senior Vice President and Chief Financial Officer
James Tarasovitch said, “the news needs to be approached with
caution, since one year, unfortunately, doesn’t constitute a
trend.”

The Cost Containment Council said it had not done enough
analysis to explain the forces that helped hospitals to their
biggest profit margin since the agency began tracking the
statistics in 1994.

Tarasovitch said that the state margin levels are generally
below the minimum margins – typically 4 to 6 percent – that
hospitals require to make necessary and sometimes critical clinical
and health information technology, infrastructure and patient
safety advances.

BRMC is in the midst of a $14.5 million capital construction and
renovation project. The facility has also added new medical
programs and obtained “fair contracts with payors.”

The financing for the construction project is threefold – state
grants, bonds and philanthropy.

Tarasovitch specifically pointed out the benefits of an
organization like the Bradford Hospital Foundation in raising funds
to meet the gaps in traditional funding sources for the medical
center.

He also noted the BRMC administration and staff have done what
others in the state with similar results have accomplished –
namely, “restructuring the way we do business and adding the new
services that our community needs.”

At BRMC, that means the recruitment of new physicians, including
cardiologist Steven C. Hermmann, M.D., Ph.D, neurologist Petronio
M. IIagan, M.D. and obstetrician/gynecologist Peter M. Delneky,
M.D., FACOG, along with part-time pulmonologist Frank Arnal, M.D.,
FCCP. The hospital has also added a specialized weekly Wound Care
Clinic with Thomas Serena, M.D., FACS.

Statewide, 176 general hospitals in Pennsylvania reported $27.64
billion in total revenue, and $1.27 billion in income. That was an
improvement over the fiscal year ending in 2004, when hospitals
reported $25.8 billion in revenue and $858.3 million in
profits.

In November 2005, BRMC officials reported a net income of $1.7
million for 2004-05. This milestone, which was reached for the
first time in several years, is something they intend to repeat in
2005-06.

“We have a positive bottom line of approximately $1 million and
expect to end the year in the black,” Tarasovitch said – just seven
months into the current fiscal year. “We’ve been able to accomplish
this through the efforts of everyone by controlling costs and
through the new service lines.”

BRMC, like its counterparts around the state, is still hurt by
the cost of providing uncompensated care for the uninsured and
underinsured and the possible negative effect of proposals under
consideration for cuts in the Medicare and Medicaid programs.

Hospitals throughout the Commonwealth lost $541 million to bad
debt and treating the uninsured, up from $521 million in 2004,
while investments and donations produced less than in 2004,
dropping from $324 million to $290 million.

In 2004, about four-fifths of the hospitals’ revenue came from
private insurance companies and Medicare, the federal government’s
health care program for the elderly.

BRMC is no exception.

“BRMC continues to shoulder a growing uncompensated care load,
due, in part, to the restructuring of the Medicaid laws,”
Tarasovitch said, explaining that as the state continues in its
efforts to try to balance its budget, more restrictions are being
placed on Medicaid patients which, in turn, place more
responsibility and cost on communities.

“We continue to let our voice be heard through our state
legislators and peer hospitals to make sure that our community
continues to be taken care of – we don’t turn anyone away,”
Tarasovitch said.

While there’s much for many of Pennsylvania’s hospitals to be
optimistic about, financial analysts are also keeping an eye on how
the news could be adversely affected if proposed cuts in Medicaid
and Medicare are approved.

The president’s federal budget proposal includes $13.5 billion
in cuts over five years to the Medicare and Medicaid programs.

The estimated impact on Pennsylvania hospitals is nearly $700
million over five years.

“All of this could change if that happens,” Tarasovitch said.
“This positive direction could eventually be reversed.”