Financial results are in for the three local hospitals and for the second year in a row Sharon Regional Health System reported a loss.

The Sharon health care provider posted a net loss of $2.360 million in the fiscal year ending June 30. That comes on top of a $2.9 million loss in fiscal 2001. Sharon Regional blamed the loss on rising costs.

Financial details of hospitals throughout the state were released by the Pennsylvania Health Care Cost Containment Council. The Herald asked all three Mercer County hospitals -- Sharon Regional, UPMC Horizon and United Community Hospital -- for additional information about their finances, including earnings and total income from operations. All three are non-profit hospitals.

Sharon Regional said it posted a $1.259 million loss in operations in fiscal 2002. With 1,700 employees, Sharon Regional is Mercer County's largest single employer.

UCH in Pine Township and UPMC Horizon, which has hospitals in Greenville and Farrell, reported their earnings and income from operations were in the black.

While showing a loss is a concern, Ed Newmeyer, director of marketing and community relations for Sharon Regional, noted the council's report shows 41 percent of all hospitals in the state lost money last year, compared to 34 percent in 2001. He added Sharon Regional wasn't in a dire position or in a "do or die'' mode.

"Certainly we're real concerned about it,'' Newmeyer said. "Unfortunately, expenses have grown faster than revenues, and we've taken steps to address that. But we feel comfortable that we got things straightened around and we expect this year to be better. We're real confident where we are this year and where we're headed.''

However, he said he was hesitant to predict if the hospital would be profitable in fiscal 2003. Newmeyer said he didn't know how the hospital funded the losses.

During fiscal 2002, Sharon Regional said its employee hospitalization insurance and pension plan costs jumped $2 million. Other increases were a $1.8 million hike in malpractice insurance, an $800,000 rise in pharmaceutical supplies and a $1.2 million increase in cancer drugs in addition to expenses for caring for a growing number of patients.

There were good signs for Sharon Regional.

The report shows that Sharon Regional had the highest three-year gain -- on a percentage basis -- in net patient revenue among all northwestern Pennsylvania hospitals. Sharon Regional credited that to offering advanced services such as open-heart surgery, angioplasty and cancer treatment. That, the hospital said, allowed patients to get treatment locally instead of going to Pittsburgh or elsewhere.

However, Sharon Regional also had the highest three-year percentage gain in total operating expenses among the same pool of hospitals.

UPMC Horizon reported earnings of $5.4 million and total income from operations of $4.9 million. Both of those figures include a one-time, out-of-period insurance reimbursement adjustment.

"We've worked hard to get there,'' said Michael Downing, vice president of planning and marketing for Horizon. "If you look at our three-year average total margin of 5.09 percent -- the hospital and staff continues to work very hard to develop good programs and services for our patients' needs.''

Downing said he was also pleased that Horizon's three-year average change in expenses was 5.47 percent, a good figure at a time when reimbursements are lagging.

"We're all facing less reimbursements from Medicare and medical assistance and managed care programs,'' Downing said. "It makes it more challenging each year.''

Newmeyer agreed with that, noting Medicare payments to hospitals in Meadville, New Castle, Butler and the Youngstown-Warren areas are significantly higher than those paid to Mercer County hospitals. He said the disparity is more than 7 percent, and if Sharon Regional were paid on an equal basis with neighboring counties it would mean an additional $3.2 million for the hospital.

UCH reported earning $1.741 million, with a $384,000 profit in operations.

"Considering everything, considering what you're hearing from everyone else, I thought we had good year,'' said John Lewis, chief executive officer.

Like other hospitals, UCH saw cost increases. Lewis said the hospital had to bump up wages in order to be competitive with other health-care providers. Also, health-insurance premiums for employees saw a sharp 30 percent jump.

Source: Pennsylvania Health Care Cost Containment Council

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