Temple University Health System is delaying a major renovation at its financially struggling Jeanes Hospital and will close an inpatient rehabilitation unit there in May.

The decisions come as Temple reported a $35 million operating loss in the six months ended Dec. 31, up from $23.5 million the year before, excluding the Fox Chase Cancer Center, which Temple bought over the summer.

"The operational headwinds that we encountered in the first two quarters are certainly related in part to a significant amount of change at the health system," said chief executive Larry Kaiser, who was hired two years ago to financially stabilize the system, the biggest provider of care to poor Philadelphians.

"I think any time you embark on a change like this, there's a period of time where there's a ramp-up. I believe we are about to see the fruits of that ramp-up," Kaiser said Wednesday during a conference call with bond analysts.

Kaiser's strategy to recruit high-profile physicians and expand the system's reach into the suburbs is paying dividends at Temple University Hospital, which had higher inpatient admissions in the six months ended Dec. 31.

During the quarter ended Dec. 31, 25 new doctors accounted for 700 inpatient cases, and cardiac services were up 37 percent, Kaiser said.

Chestnut Hill Cardiology, an eight-physician practice in Flourtown that joined Temple a year ago, used Temple for 92 inpatients, 20 more than the target, in its first six months aboard, Kaiser said. Better-paying Medicare and commercial insurers accounted for 89 percent of that business.

Overall, Temple gets its biggest chunk of revenue - 43 percent in the six months ended Dec. 31 - from Medicaid, which pays only about 82 percent of the providers' costs.

A second suburban cardiology group, with 20 physicians, is expected to join Temple on May 1 under a professional services agreement, Kaiser said.

Though inpatient revenue at Temple University Hospital increased $13.6 million in the six months ended Dec. 31 compared with the same period the year before, inpatient revenue fell $2.3 million at Jeanes, which is in Northeast Philadelphia and has 176 beds.

As of Feb. 28, Jeanes had a $5.8 million loss for the fiscal year that started July 1, Temple system spokeswoman Rebecca Harmon said Thursday.

When Temple bought Fox Chase for $84 million, it committed $30 million toward its integration with neighboring Jeanes. The plan included private rooms at Jeanes for Fox Chase patients.

Despite the slowdown in the changes at Jeanes, "we're committed to completing a renovation. It's simply a matter of timing," Harmon said.

Closing the rehabilitation unit will eliminate 22 positions, including five part-timers, Harmon said.

"We're working very closely with all of our affected employees to place them in comparable positions either at Jeanes or elsewhere in the health system," Harmon said.