The biggest nonprofit health systems in the Philadelphia region mostly reported strong revenue growth in the nine months that ended March 31, their latest reports to municipal bond investors show.
Children’s Hospital of Philadelphia topped the list for revenue growth, with nearly 10% growth. CHOP reported total revenue of $3.35 billion, up from $3.05 billion the previous year.
CHOP was one of three systems to post operating profits in the first nine months of fiscal 2024, along with the University of Pennsylvania Health System and ChristianaCare.
Still, CHOP was the only one of the three reporting weaker operating performance this year. CHOP’s operating income fell to $56 million from $101 million.
CHOP cited overall rising labor costs and increased expense to staff its new behavioral health and crisis center at the Cedar Avenue health campus in West Philadelphia and the expansion of the NICU at its King of Prussia hospital.
The region’s money-losing health systems lost less money. The seven other systems in The Inquirer’s roundup all reported small losses this year. Here’s a look at what this quarter’s reports revealed about the financial health of the Philly region’s health systems, plus highlights from smaller hospitals and major players in New Jersey.
Delaware’s ChristianaCare had the strongest operating profit margin, at 4.9%. It is planning to expand its footprint in the Philadelphia market with three micro hospitals in Chester and Delaware Counties.
The University of Pennsylvania Health System’s 2.5% operating margin made it the region’s second most-profitable system, behind ChristianaCare. Penn’s results included $129 million from a Medicare drug settlement, offset by an $80 million reserve for medical malpractice expenses. Penn’s revenue was just over $8 billion, up 9.2%, across its six hospitals and medical practices.
Thomas Jefferson University, which owns Jefferson Health, had a relatively small revenue gain of 3.7%, climbing to $7.3 billion from $7.09 billion last year. Its operating margin was minus-0.41%, an improvement from minus-1.66%. With 17 hospitals, Jefferson is the region’s biggest health system by number of hospitals, and it will nearly double in size to 30 hospitals with its expected acquisition of Lehigh Valley Health Network.
Temple University Health System reported a $23.3 million operating loss for the nine months that ended March 31, compared to a $53.2 million loss in the same period a year ago. The results include a $12.5 million loss at Chestnut Hill Hospital, which Temple acquired with two partners at the beginning of 2023.
Main Line Health reported a $50 million operating loss for the nine months that ended March 31, compared with a $114 million loss the same period a year ago. Its revenue climbed a strong 8% to $1.78 billion from $1.64 billion.
Tower Health reported a $27.4 million operating loss for the nine months that ended March 31, compared with a $122.8 million loss in the same period a year ago. Reducing losses, however, did not help Tower’s cash reserves. That closely watched measure sank to the equivalent of 30 days of operating expenses on March 31 from 32 days at the end of the year. This week, Tower announced a refinancing expected to nearly double its cash reserves.
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Among the three smallest nonprofit hospital operators in the Philadelphia area, Doylestown Health was closest to breaking even. (Redeemer Health and Grand View Health are the two other single-hospital providers in the region.)
Bucks County-based Doylestown reported a 2.3% operating loss in the first three quarters of fiscal 2024. Its loss was $7.65 million on $331 million in revenue. Doylestown has a preliminary agreement to be acquired by Penn, but is under pressure to improve its operating results to complete that deal.
Redeemer’s loss was $34 million on $332 million in revenue. Redeemer operates Holy Redeemer Hospital in Meadowbrook in Montgomery County.
In Bucks County’s Sellersville, Grand View reported a $35 million operating loss on $208.5 million in revenue. Grand View’s revenue climbed nearly 17% over last year, thanks to the opening of a new patient pavilion last June.
Three of five South Jersey health systems with publicly available financial results had operating losses last year, according to their audited financial statements. The two biggest by revenue, Virtua Health and Cooper Health, were profitable.
Those with operating losses were Inspira Health, AtlantiCare, and Cape Regional, which is being acquired by Cooper. Capital Health and Shore Medical Center have not yet posted their 2023 audited financial statements on their websites.
Most New Jersey systems report financial results on a calendar year basis.
