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Published: Sunday, 12/19/2010

Most Toledo area hospitals post gains in 2010

Hospital officials, however, are looking at ways to meld St. Luke's operations into ProMedica, a process aimed at improving efficiencies that takes all of the system's Toledo-area hospitals into account.

A consultant is working with officials, and members of the hospital's medical staff, board, and community will weigh in, Gary Akenberger, ProMedica's senior vice president for finance, said.

It could be some time before any consolidation strategy is finalized, Kathleen Hanley, ProMedica's chief financial officer, said.

"We want to move as rapidly as possible, but we want to do it methodically," Ms. Hanley said.

Improving efficiency is a priority for all hospitals nationwide as they reduce overtime, pull back on capital spending, and make other moves, David Koepke, lead scientist for Thomson Reuters' health-care and science business, said.

"Hospitals have done a pretty good job of cost control," Mr. Koepke said.

"They're more careful about acquiring supplies. They're more careful about staffing."

Mr. Koepke added, "Of all industries, health care has managed to weather the recession and the subsequent time pretty well."

The Blade annually examines how Toledo-area hospitals are doing financially by obtaining the most recent Internal Revenue Service forms, called 990s, filed by the non-profit entities.

As a public institution, the University of Toledo Medical Center, formerly the Medical College of Ohio Hospital, doesn't file the same annual IRS forms as the other hospitals, but it keeps public financial records.

All that information plus other statistics from St. Luke's, ProMedica, Mercy, and the former MCO are compared.

Even though none of the Toledo-area hospitals is a for-profit entity, each must generate enough revenue to reinvest in facilities and equipment.

Another component the hospitals report is executive compensation.

ProMedica's Alan Brass, who retired last year as chief executive, regained his status as the highest-paid hospital executive in the Toledo area, receiving a compensation package worth nearly $3.5 million.

ProMedica's Alan Brass, who retired last year as chief executive, regained his status as the highest-paid hospital executive in the Toledo area, receiving a compensation package worth nearly $3.5 million.

ProMedica's Flower Hospital, meanwhile, again last year had the best financial result among all Toledo-area hospitals based on revenues received for the business of caring for patients.

Flower in 2009 had an operating profit of nearly $23.7 million, giving it an operating margin of nearly 13 percent and contributing to ProMedica's operating profit of nearly $56.6 million, a 3.5 percent margin.

At UTMC, operating profit and margin for the fiscal year that ended June 30 were higher than budgeted. The hospital had nearly $10.3 million in operating profit and a margin of 3.9 percent.

UTMC did better than expected with profitable services, such as orthopedics and heart care, and negotiated better contracts with many suppliers to cut expenses, said Scott Scarborough, interim executive director of UTMC and the university's senior vice president for finance and administration.

St. Luke's last year was the only Toledo-area hospital with an operating loss, which totaled more than $15 million.

The hospital officially became part of ProMedica in September and was added to its Paramount Health Care network, solving some of St. Luke's problems of being shut out of lucrative insurance contracts.

The Federal Trade Commission continues to evaluate the match, a process that could wrap up early next year, Ms. Hanley of ProMedica said. The FTC does not comment on investigations.

ProMedica expects its hospitals will fare financially about the same this year as last, Ms. Hanley said. St. Luke's performance could improve slightly, although it still will have an operating loss this year, she said.

Mercy St. Anne Hospital was the only other hospital that came near negative financial territory last year with an operating profit of $629,002.

St. Anne's operating margin was just 0.6 percent, and insurance issues also affected -- but does not endanger -- that hospital, said Todd Warner, chief financial officer for Mercy and other Catholic Health Partners hospitals in Lima, Ohio, and Lorain.

Last year, Mercy overall had a 2.7 percent margin and an operating profit of $22.9 million, with Mercy St. Charles having the best performance among the system's local hospitals with a 4.3 percent operating margin.

The system also provides a high level of community benefit, such as free hospital care, totaling 9.7 percent of its total expenses, Mercy officials say.

This year, Mercy through November has a 3.8 percent operating margin, even though patient volumes are lower than expected, Mr. Warner said.

Attempts to improve efficiencies have made a difference, he said.

Mercy St. Vincent Medical Center, for example, has been able to decrease the length of time patients need to be in the hospital, Mr. Warner said. That not only makes patients happier, but it allows Mercy to save $500 a day with insurance programs that pay by the type of case instead of length of stay and increases the hospital's capacity, he said.

Nearly two years ago, St. Vincent implemented a care-coordination center, where nurses electronically schedule and track every patient's admission, unit placement, tests, and other information. Each hospital unit has electronic boards showing the status of patients, who are told from the start each step in their care plans.

"It seems so logical, and it seems so simple," Mindy Ward, vice president of finance and northern Ohio division controller for Catholic Health Partners, said. "But it really is making a big difference."

Kim Mullins, clinical nurse manager for the care coordination center and orthopedics unit at St. Vincent, said 90 percent of patients transferred from other hospitals have a room assignment within 10 minutes. "I think everyone would agree it was hard to get used to, but I don't know how we could live without it now," she said.

St. Vincent's is serving as a model for other hospitals.

Officials from Baptist Medical Center South in Montgomery, Ala., visited St. Vincent in August, 2009, and they started using the electronic "hub" system in mid-September.

One benefit is more collaboration among departments, Vanessa Stacks, an administrative director at Baptist, said. "It just helps streamline the process," Ms. Stacks said. "It's definitely had an impact."

Nationwide, well-run hospitals are tightening their belts and working to improve efficiencies, and utilizing technology plays into that effort, Sheila Schweitzer, senior vice president at Ingenix, a health information and consulting firm, said.

This year's operating margins nationally should be better than last year's, although they will stay in the low single digits on average, she said.

"Hospitals are paying a lot more attention to the revenue cycle," Ms. Schweitzer said.

Contact Julie M. McKinnon at: jmckinnon@theblade.com or 419-724-6087.



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