HUP ranks first in profit margin

U. hospital has topU. hospital has topincome in the state The Hospital of the University of Pennsylvania ranked first in a profit margin report of Philadelphia area hospitals for the 1995 fiscal year. The report was released by the Pennsylvania Health Care Cost Containment Council. HUP led the pack of hospitals with a net margin of 19.4 percent. The hospital also led last year with a net margin of 21.3 percent. It was by far the most profitable facility in the state last year, with a $110.8 million margin from an operating revenue of $72.8 million plus income from investments and contributions. The hospital's surplus profits dwarfed the second most profitable hospital in the state, the University of Pittsburgh Medical Center, which had a profit margin of only $26.2 million. HUP also had the largest operating deficit in the state in 1898 -- $14.2 million. Overall, Philadelphia area hospitals put major effort into cutting expenses to improve profit margins. Health System Spokesperson Rebecca Harmon said the system has worked "very, very hard to increase profits." She said the system has had the same basic cost-cutting plan since 1985. The plan has reduced hospital expenditures by $75 million. Most of the cost-cutting measures involve "eliminating duplicative service, streamlining management and reengineering work processes," Harmon said. She said HUP officials want to continue to reduce the hospital's expenditure in the future, but not reduce the quality of patient care. That will be executed by using a continuation of the already existing system. She said the system is "continually watching market forces that will keep us alert to the need to continue to reduce expenses." However, HUP officials and other health care experts have warned that the 1995 numbers may not be sustainable. Life will grow harder for HUP and other hospitals as government and commercial insurers clamp down on the amount they pay for medical services, William Kelley, chief executive officer for the Health System, told The Philadelphia Inquirer. According to the Inquirer, such predictions have been repeated recently as the medical system tries to adapt to new rules set by cost-conscious managed-care programs. Kelley added that, while HUP is proud of its performance, the margins do not include the investments made in renovations and equipment.

Please note All comments are eligible for publication in The Daily Pennsylvanian.