Einstein, Holy Redeemer report red ink

The recent layoffs announced by Crozer-Keystone Health System and Temple University Health System are a sign of financial turmoil at all but the strongest Philadelphia-area hospital networks.

Crozer and Temple both had operating losses in the six months ending Dec. 31, and so did Einstein Health Network and Holy Redeemer Health System.

However, officials at Einstein, which has hospitals in Philadelphia and Montgomery County, and at Holy Redeemer, which has a hospital in Meadowbrook and other diverse health services in the region, said Thursday that neither system was planning layoffs.

"Of course, there will be belt-tightening, but nothing with layoffs, pension, or health benefits," said Barbara L'Amoreaux, spokeswoman for Holy Redeemer, which had a $2.5 million operating loss on revenue of $177 million in the first half of fiscal 2014.

"We are, like everyone, making adjustments for the new era of health care," L'Amoreaux said.

One of the biggest problems bedeviling hospitals, which depend on "heads in the beds" to make money, is a long-term decline in inpatient admissions. Government and commercial insurers are increasingly downgrading short hospital stays to so-called observations, with significantly lower reimbursement rates.

Other factors contributing to the decline in admissions include the long-term shift to outpatient settings and Medicare's crackdown on patients returning to the hospital within 30 days of discharge. Hospitals face penalties for too many readmissions.

At Holy Redeemer, inpatient admissions for the six-month period ending Dec. 31 fell 19 percent, to 5,562 last year from 6,900 in 2010.

Crozer, which said last week that it was cutting 250 positions after losing $15.7 million since July 1, saw a 17 percent decline in admissions over the same period, according to bond-disclosure documents.

Even Abington Health System, which had a $2 million operating profit on revenue of $386 million in the six months ending Dec. 31, has seen a 19 percent decline in admissions since 2010.

Abington is aided financially by a relatively small level of Medicaid in its reimbursement mix. Medicaid, which insures the poor but does not fully cover hospital expenses, accounted for 11.7 percent of Abington's revenue.

By contrast, Medicaid accounted for 35.8 percent of revenue at Einstein, which had a $15.3 million operating loss on revenue of $544 million in the six months ending Dec. 31.

Temple University Health System, which this week said it would lay off 75 at Jeanes Hospital, reports its Medicaid exposure in terms of patient numbers and said that 41.3 percent of its patients in the six months ended Dec. 31 were covered by Medicaid. The system had a $23.9 million operating loss on revenue of $681 million.

Einstein and Temple also have very high proportions of Medicare, which pays better than Medicaid but not as well as commercial insurance.

"The higher proportion of public payers, the lower the profit. Really, it's that simple," said William E. Aaronson, a professor and health-care expert at Temple University's Fox School of Business.