Capital Health reported only 20 days cash on hand at the end of June
Capital has had long-term financial troubles, but the healthcare industry overall is continuing to struggle to regain its financial footing following the coronavirus pandemic disruption.
A New Jersey health system stands out, as the first half of the fiscal year is proving challenging for many in the Philadelphia region, by one closely watched measure of financial reserves.
Capital Health, which operates two Mercer County hospitals, had enough cash on hand to pay its expenses for just 20 days on June 30, according to the nonprofit’s latest public financial data.
That level of cash gives Capital little margin for error, said Joshua Nemzoff, a healthcare consultant based in New Hope who does not work for Capital. “If anything goes wrong, they’ve got a problem,” he said.
By contrast, Cooper University Health Care and Inspira Health Network had more than 200 days of cash on hand on June 30. Both operate south of Capital in New Jersey.
A comparable figure was not available for Virtua Health, which competes with Capital on the northern edge of its market in Burlington County.
Capital did not respond to a request for comment last week.
Despite Capital’s financial struggles, its CEO, Al Maghazehe, has been among the top five highest-paid nonprofit health system CEOs in the Philadelphia region in each of the four years that ended in 2023, according to The Inquirer’s review of nonprofit tax forms.
The health system had $1.32 billion in revenue last year, but its operating profit was just $6 million, or less than a half a percent. That was an improvement over an $8 million loss the year before.
Unusual financing
Capital is unusual among nonprofit health systems in that it does not have municipal bond debt.
When the health system built a 200-bed hospital in Hopewell Township to replace one in Trenton, it took out a mortgage that was ensured by the Federal Housing Administration. That $755 million loan was the largest ever for the agency.
The hospital opened in 2011 with a plan to attract patients to cross state lines from Bucks County, including those with better insurance than the population Capital historically served.
In the dozen years after the Hopewell hospital opened, Capital hired nearly 100 primary-care doctors and specialists in Bucks County.
Revenue has soared, but profitability remains weak.
Capital faces competition from other nearby hospitals: Trinity Health Mid-Atlantic’s St. Mary Medical Center in Langhorne and Penn Medicine’s Princeton Medical Center in Plainsboro Township. Both are about a 20-minute drive from Capital’s Hopewell Campus.