`spirited' Rejoinder From Harveys Lake

4-year Trojans Starter On Mark On Senior Night

By M. PAUL JACKSON Times Leader Staff Writer
 Sunday, November 07, 1999 &nbsp;&nbsp;&nbsp;&nbsp;Page: 1D 





WILKES-BARRE - The news spread quickly through the halls of the Penn State
Geisinger Health System. &nbsp;&nbsp;&nbsp; 
 The system had begun implementing a six-step plan to save itself millions
of dollars, leading to the announcement it would lay off hundreds of
employees. &nbsp;&nbsp;&nbsp; The pending cuts - an attempt to save between $150 million and $200 million
dollars - came as no surprise to many employees, however. &nbsp;&nbsp;&nbsp; 
 ``Nobody likes to see anyone lose their jobs,'' said Dave Jolley, a
spokesman for Penn State Geisinger Wyoming Valley Medical Center. ``That's
something that's a concern to everyone, even if they're not affected. &nbsp;&nbsp;&nbsp; 
 Geisinger, expected to begin the layoffs in the next few weeks, isn't
alone. Regional hospitals from Tyler Memorial in Tunkhannock to Wyoming Valley
Health Care System in Wilkes-Barre and Kingston are facing similar issues. &nbsp;&nbsp;&nbsp; 
 Medicare cutbacks, along with increasing numbers of patients switching from
traditional insurance to managed care plans, have cost area hospitals millions
of dollars in revenue. Now, many are struggling to keep up. &nbsp;&nbsp;&nbsp; 
 ``I think we're going through a kind of problem with health care. It's a
very, very difficult time.'' said Gladys Bernet, a spokeswoman for Tyler
Memorial Hospital. &nbsp;&nbsp;&nbsp; 
 Financial pressure &nbsp;&nbsp;&nbsp; 
 According to a report from the Pennsylvania Health Care Cost Containment
Council, an independent state agency, many of the region's hospitals paid out
more than they received between 1995 and 1998. &nbsp;&nbsp;&nbsp; 
 The report, released Oct. 7, tracked hospital financial records for the
1997-98 budget year, which ended June 30, 1998. It detailed net patient
revenue reported by hospitals to the state and compared those numbers to the
total operating expenses of the state's 199 general acute care hospitals. &nbsp;&nbsp;&nbsp; 
 Net patient revenue is the amount a hospital receives from all its
patients. The number is smaller than the ``gross revenues'' reported by
hospitals and other charities to the Internal Revenue Service. Gross revenues
include investment income and other funding sources. &nbsp;&nbsp;&nbsp; 
 Wyoming Valley Health Care System posted one of the largest gaps between
increased net patient revenues and increased expenses. &nbsp;&nbsp;&nbsp; 
 The system's two hospitals, Wilkes-Barre General and Nesbitt Memorial, saw
patient revenues jump 6.8 percent from 1996 (after the merger of the two
hospitals) to 1998. &nbsp;&nbsp;&nbsp; 
 But, total operating costs went up 9.4 percent over the same period. &nbsp;&nbsp;&nbsp; 
 Overall, the system took in $658 million in patient revenues during the
period - but paid about $700 million in operating expenses, according to the
report. &nbsp;&nbsp;&nbsp; 
 John McCarthy Sr., chairman of the board for the health system, refused to
comment on its financial data, and referred all questions to Pat Finan, chief
executive officer. &nbsp;&nbsp;&nbsp; 
 Neither Finan nor other officials responded to repeated requests last week
by The Times Leader to discuss the hospital's financial records. &nbsp;&nbsp;&nbsp; 
 Spokesman Jim Roberts said the health system has been under increasing
financial pressure from Medicare cuts. &nbsp;&nbsp;&nbsp; 
 Roberts said about 62 percent of the system's patients are Medicare
customers, and spiraling cuts to the Medicare program have hurt the hospital
system. &nbsp;&nbsp;&nbsp; 
 Tyler Memorial Hospital also reported more expenses than revenue during the
three-year period. The 60-bed hospital saw its operating expenses jump by 4.38
percent between 1995 and 1998. Net patient revenues increased by only 1.76
percent over the same period. &nbsp;&nbsp;&nbsp; 
 The hospital managed to break even during the three-year period, but the
savings came at a cost, officials said. &nbsp;&nbsp;&nbsp; 
 The hospital laid off several workers in 1993 and 1998, President and Chief
Executive Officer William Milligan said. He could not say how many. &nbsp;&nbsp;&nbsp; 
 ``Everybody keeps wanting to pay you less, so you keep having to cut your
costs,'' he said. ``We've been working hard to control costs for a long
time.'' &nbsp;&nbsp;&nbsp; 
 Tyler Memorial has had an ongoing conflict with the Geisinger Health
System. &nbsp;&nbsp;&nbsp; 
 About 35 to 38 percent of the hospital's patients are customers of the
Geisinger Health Plan. Tyler has complained that Geisinger pays it 10 to 20
percent less than other managed-care providers for services, and a contract
extension with the health plan expires in March. &nbsp;&nbsp;&nbsp; 
 Meanwhile, for Penn State Geisinger Wyoming Valley, its financial problems
have been significant. &nbsp;&nbsp;&nbsp; 
 The hospital's parent corporation, Geisinger Health System, merged with
Penn State, parent of Hershey Medical Center, in 1997. Its net patient
revenues have dropped 1.63 percent in three years. &nbsp;&nbsp;&nbsp; 
 Overall, the hospital took in $216 million in patient revenue between 1995
and 1998, but paid out $215 million in the same period. &nbsp;&nbsp;&nbsp; 
 The hospital is just one part of the overall Penn State Geisinger Health
System, which reported losses of $6.6 million as of June 30. &nbsp;&nbsp;&nbsp; 
 To balance its losses, the health system plans to cut 300 to 400 jobs
within the next few weeks, and will eliminate about 200 open positions. &nbsp;&nbsp;&nbsp; 
 Conrad Schintz, senior vice president of operations, could not say how many
jobs would be lost at the Plains Township hospital. &nbsp;&nbsp;&nbsp; 
 ``If we make changes and stay ahead of the market, we'll continue to
lead,'' said Tom Sokola, vice president of finance. &nbsp;&nbsp;&nbsp; 
 Expenses rise &nbsp;&nbsp;&nbsp; 
 Overall losses at some hospitals are attributed to a number of areas within
the medical community - including the growth of managed care plans, massive
Medicare cuts and even Y2K maintenance costs. &nbsp;&nbsp;&nbsp; 
 As patients switch from traditional insurance packages to cheaper managed
care plans, hospitals that have relied on money from indemnity insurance
receive less for performing the same services. &nbsp;&nbsp;&nbsp; 
 The Balanced Budget Act of 1997 also cut more than $200 billion to
Medicare, a lifeline many hospitals have relied on to stay afloat. Because of
Pennsylvania's large elderly population, many area patients are Medicare
customers. &nbsp;&nbsp;&nbsp; 
 ``If you were running a business and 75 to 80 percent of the people you did
business with paid you less than cost, you couldn't do it,'' Milligan said. &nbsp;&nbsp;&nbsp; 
 Geisinger Wyoming Valley could lose about $55 million in Medicare
reimbursements in the next five years, while Mercy Hospital could lose about
$7 million over the next two years. &nbsp;&nbsp;&nbsp; 
 Y2K compliance measures have added up, as well. Tyler Memorial spent as
much as $80,000 to upgrade its computer systems last year, Milligan said.
Geisinger Wyoming Valley Medical Center spent more than $12.5 million to
upgrade, officials there said. &nbsp;&nbsp;&nbsp; 
 Some hospitals have made up for their operating losses by dipping into
their investment or contribution funds. &nbsp;&nbsp;&nbsp; 
 ``The light bill and the water bill continue to go up, and we get paid less
each year,'' Jolley said. &nbsp;&nbsp;&nbsp; 
 But not all hospitals fared so poorly. Mercy Hospital in Wilkes-Barre
reported a 10.25 jump in its patient revenue between 1995 and 1998, while
having only a 0.92 percent increase in its operating expenses. &nbsp;&nbsp;&nbsp; 
 The hospital reported a $3 million jump in patient revenue between 1997 and
1998, and a $2 million increase in operating expense in the same period. &nbsp;&nbsp;&nbsp; 
 Between 1996 and 1997, the hospital did even better. Mercy Hospital
reported a $8 million patient revenue increase in 1996, compared to a $5
million increase in operating expenses. &nbsp;&nbsp;&nbsp; 
 The hospital, part of Mercy Health Partners, attributed the growth to the
success of its open heart surgical and catheterization programs. &nbsp;&nbsp;&nbsp; 
 ``Overall, admissions have been up,'' spokesman Jeff Lewis said.
``Certainly the open heart and the (catheterization) programs have helped
tremendously.'' &nbsp;&nbsp;&nbsp; 
 Belt-tightening &nbsp;&nbsp;&nbsp; 
 In addition to using investment funds to balance the books, hospitals have
reduced non-clinical staffing levels, eliminated competing suppliers and even
reduced the length of hospital stays. &nbsp;&nbsp;&nbsp; 
 Hazleton General Hospital, for example, reduced its full-time equivalent
employees - employees who work a maximum of about 2,080 hours a year - by more
than 700 people last year, spokesman Pat Ward said. &nbsp;&nbsp;&nbsp; 
 ``We just tightened our belts,'' he said, &nbsp;&nbsp;&nbsp; 
 The hospital reported a 7.42 percent increase in its total operating
expenses, but saw only a 6.81 percent increase in patient revenues. &nbsp;&nbsp;&nbsp; 
 Still, officials say patient stay cutbacks have their limits. &nbsp;&nbsp;&nbsp; 
 Tyler Memorial Hospital dropped its length-of-stay period from six days in
1991 to about 3.2 days now, Milligan said. &nbsp;&nbsp;&nbsp; 
 ``People are going home sicker,'' he said. ``No one's going to pay for
(treatment).'' &nbsp;&nbsp;&nbsp; 
 And while some administrators are hopeful Congress could restore some of
the money lost by the Balanced Budget Act, many said the belt-tightening - and
the problems - will continue. &nbsp;&nbsp;&nbsp; 
 ``So many hospitals now are living off their investments,'' Bernet said.
``You can't do that as a policy.'' &nbsp;&nbsp;&nbsp;

Ailing Hospitals Area's Financially Strained Health-care Providers Forced To Take Drastic Steps To Remedy The Problem