Sacred Heart’s profits climb
But hospital’s 8 percent margin on care doesn’t reflect other losses, CFO says
Providence Sacred Heart Medical Center earned a profit of nearly $100 million in 2007 and 2008 as patients were admitted to the hospital in record numbers.
The hospital, part of a large Catholic health organization that operates as a tax-exempt charitable organization, kept 8 cents of every dollar collected for treating patients. That surpassed the hospital’s norm and came amid recession and increasing calls to control medical costs as part of health care reform.
Yet the numbers don’t accurately reflect the financial dynamics of the two-year period, said Kevin Walstrom, the chief financial officer for Sacred Heart.
Patient care profits don’t show how badly Wall Street’s decline battered the hospital’s investment portfolio, he noted. Sacred Heart lost $46.6 million in its stock and bond investments in 2008.
“If you factor in those numbers, you’ll see a different picture,” he said. “We’ve ended up behind were we wanted to be.”
The two years were profitable for hospitals across the state, said Randall Huyck, an analyst with the Washington state Department of Health.
By collecting more from patients, insurers and government programs, the hospitals were able to offset some of the losses, which also include such things as declining rental income from medical clinics.
The good fortunes were not shared by every hospital.
Deaconess Medical Center earned a profit of $4.2 million from treating patients – a fraction of the $98.9 million reported by Sacred Heart for 2007 and 2008. Deaconess’ profit margin was 1.4 percent in 2007 followed by 0.6 percent last year.
Walstrom said Sacred Heart’s profits helped offset losses in other Providence operations in Eastern Washington.
The Providence system, which includes Holy Family Hospital, would like to achieve a 5 percent margin each year.
That would provide enough money for building construction and other major costs and ensure the system can continue providing above-average levels of charity care and withstand more bad debts.
Providence reported this summer that it provided $67.8 million in community benefits to the region last year, including discounted medical care, financial help for cash-strapped senior meal programs, emergency housing, medical research and education programs, and support for the Special Olympics.