Yale-New Haven earns top rank for finances

Yale-New Haven Hospital outperformed its in-state competitors in the fiscal arena, even without David Swensen’s guidance.

According to a government financial report on Connecticut’s 31 “acute care” hospitals, Yale-New Haven’s performance was among the strongest in the state and improved from last year, while the average operating performance of other state hospitals fell slightly. The report concluded that the overall financial health of Connecticut’s hospitals remained relatively unchanged, but expenses and government subsidy programs limit prospects for development of the state’s health care infrastructure.

The annual report for the 2003 fiscal year was issued Feb. 10 by the Office of Health Care Access, an organization that monitors the quality of Connecticut’s health care delivery system. The report stated that the median hospital operating margin decreased from 0.6 percent in the 2002 fiscal year to 0.3 percent in the 2003 fiscal year, with 13 hospitals reporting negative margins. The operating margin reflects the ratio of a hospital’s operating profits to its gross revenues — a higher percentage indicates a greater ability for a hospital to meet its future financial needs.

The median total margin, which takes profits from non-operating revenues such as donations and financial asset appreciations into account, improved from 0.1 percent to 0.4 percent. Thus, the report concluded, the hospitals’ financial prospects for the year remained essentially unchanged compared to a severe 3 percent drop in total profit margins between fiscal years 2001 and 2002.

Yale-New Haven was one of the strongest performers, with an operating margin of 3.9 percent, a 0.8 percent increase from last year. Yale-New Haven spokesman Vin Petrini said the extra revenues will be invested in better technology, improving access to health care and the construction of a new cancer center. He attributed the growth in operating revenue to an increase in the volume of patients. The hospital’s total margin, however, decreased from 5.4 percent to 4.9 percent.

The report stated that workforce shortages, increasing pension and employee health insurance expenses, competition with facilities belonging to physician groups, and Medicare and Medicaid programs were holding down revenues. Additionally, medical malpractice insurance expenses increased 65 percent.

Under Medicaid and Medicare — government health care programs for the poor and elderly, respectively — hospitals are often not completely reimbursed. Hospitals’ Medicare rates were changed in 2004 according to location, but the report stated that the effects of these modifications on Connecticut hospitals overall are unclear.

The stagnant statewide operating margins will make it more difficult for hospitals to invest in new equipment and facilities, which the report claimed are necessary to stay competitive.

“The financial health of our hospitals is of concern,” Office of Health Care Access Commissioner Cristine Vogel said in a press release. “They are the backbone of our health care system.”

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