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Geisinger Holy Spirit campus

Geisinger Holy Spirit is in Camp Hill.

Geisinger Holy Spirit hospital says the large operating loss shown in a recent state report is due to a one-time accounting adjustment and won’t impact ongoing efforts to keep the Camp Hill health care facility above water.

Hospital data from the Pennsylvania Health Care Cost Containment Council for the 2017-18 fiscal year shows Geisinger Holy Spirit running a 41 percent loss, having taken in $297 million in patient revenue for the fiscal year vs. $426 million in operating expenses.

But Geisinger says that $129 million of the expense is due to accounting adjustments of assets and liabilities, making it look like the hospital is bleeding cash when it’s not.

“Geisinger Holy Spirit Hospital’s fiscal year 2018 operating margin was significantly affected by a $129 million noncash accounting adjustment to state assets and liabilities at their fair values,” Kyle Snyder, Holy Spirit’s chief administrative officer, wrote in a statement. “This one-time charge has no impact on the hospital’s ongoing clinical and business operations.”

Expense

The loss shown in the PHC4 report is due entirely to a massive expense increase. Patient revenue actually increased $10 million vs. the 2016-17 fiscal report, but Holy Spirit’s expense column increased by $117 million.

Remove the $129 million valuation adjustment and the hospital would have roughly broken even for FY18.

“Inpatient and outpatient volumes are meeting expectations and the hospital recorded a positive operating margin for fiscal year 2019,” Snyder wrote. “However, what is missing from the PHC4 data is the financial performance of Geisinger Holy Spirit’s affiliates, including Spirit Physician Services. The consolidated Geisinger Holy Spirit operation is facing ongoing operational losses.”

“We continue to explore our options to improve our financial performance,” Snyder wrote, adding that the hospital system has recruited 100 new health care providers and invested $32 million in improving its emergency department and opening a new trauma center.

The hospital is also continuing to expand its collaboration with Penn State Health, Snyder wrote.

The market

Geisinger, which operates 13 hospital campuses in Pennsylvania and New Jersey, is facing a Midstate market that is increasingly crowded by rival hospital and insurance giants.

Penn State Health, in conjunction with Highmark, is building a 108-bed hospital in Hampden Township, less than a mile from the Cumberland County location of its chief rival, UPMC-Pinnacle.

UPMC-Pinnacle subsequently announced that it would expand the West Shore Hospital, located across I-81 from the Penn State Health/Highmark site, to 160 beds from its current 102.

The same is happening in Lancaster County, where Penn State Health is building a hospital in East Hempfield Township, roughly five miles from UPMC-Pinnacle Lititz, the former Heart of Lancaster medical center that UPMC-Pinnacle has said it expects to expand.

Even as Cumberland County has continued to grow at a rapid pace, inpatient hospital demand has actually declined.

Cumberland County patients used a total of 34,509 bed days in the fourth quarter of 2010, according got PHC4 data. By the final quarter of 2018, that number had dropped to 33,497, despite the county’s population growing 6.8 percent over the same time period, according to Census data compiled by Penn State.

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Email Zack at zhoopes@cumberlink.com.

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