News
Penn State Health Reports Better Financial Performance in First Six Months of Fiscal Year
Combination of increased revenue from new hospitals, higher surgical volumes and cost savings help drive better outcomes
Penn State Health delivered improved financial performance across a number of key metrics in the first six months of fiscal 2024. Several factors contributed to improved operating profit, including steady increases in patient volume at Lancaster Medical Center and Hampden Medical Center , as well as additional patient beds opening at both facilities. The health system also recorded increases in the volume of emergency services, surgical volume and outpatient consultations.
February 28, 2024Penn State Health News
From July to December 2023, Penn State Health’s operating income improved by $268 million compared to the same period last year, generating $23 million in operating income compared to a loss of $114 million in the same period period of the previous year. Operating income was also boosted by a one-time payment related to the transition of the Pennsylvania Psychiatric Institute after Penn State Health became the sole operator when the previous joint venture ended. Even without the one-time benefit, performance still improved substantially.
“Our efforts to be fiscally responsible while also responding to the needs of the communities we serve are working,” said Steve Massini, CEO of Penn State Health. “We are committed to operating efficiently for our long-term sustainability, while always providing the best quality healthcare and experience to the people of Pennsylvania and beyond.”
Penn State Health saw improvements in several performance metrics compared to the previous fiscal year. They include debt service coverage, total debt to cash flow, and operating margin. The healthcare system continues to have enough money available; its total unrestricted cash and investments improved during the period; and its cash/debt ratio also improved.
Penn State Health has been actively identifying opportunities for greater efficiency amid ongoing cost pressures caused by inflation and rising labor costs. The health system reduced its expenses during the period through savings in the supply chain.
Although labor costs continue to rise, Penn State Health has managed to decrease its reliance on outside nurses and physicians so far in fiscal year 2024 compared to the year-ago period.
After its rapid growth in recent years, Penn State Health’s financial position has stabilized. Currently, more than 20 optimization projects are underway, in a continuous effort to improve efficiency, leverage economies of scale, share best practices and better align entities across their system.
Massini noted that Penn State Health’s clinical brand remains strong and that its relationships with Highmark Health and Penn State continue to attract people to the system.
“Our improved financial performance signals the long-term success of Penn State Health, even at a time when health systems across the country are facing significant headwinds,” said Paula Tinch, Penn State executive vice president and chief financial officer. Health. “However, we realize we have more work to do as we continue to drive our revenue growth and improve our operating costs.”
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