Penn Medicine reported $117.4 million in operating profits for the first half of fiscal year 2024, a slight increase from last year.
For the six months ending Dec. 31, Penn Med had an operating margin of 2.2% over a total revenue of $5.3 billion, according to The Philadelphia Inquirer. The previous year saw Penn's operating margin standing at $103.6 million, equivalent to 2.1% of a $4.9 billion total revenue during the same timeframe.
Penn Med, which currently operates six hospitals and 10 multispecialty centers, has experienced an increase in operating profits since 2022. For the fiscal year 2023, Penn Med disclosed nearly $10 billion in revenue with an operating margin of 2.4%, which remains below pre-COVID-19 levels.
In January, Penn Med signed a letter of intent for integration with Doylestown Health, which will add a seventh hospital to the health system.
Keith Kasper, the senior vice president and chief financial officer of Penn Med, expressed optimism about the current financial landscape.
"It’s a more stable environment we’re in than it was 18 months ago,” Kasper told the Inquirer. “We’re growing on the revenue side. Our profitability is a little better, still not where we were pre-[COVID-19] pandemic."
Kasper highlighted ongoing challenges regarding the cost of contract labor, overtime, and premiums paid to employees for additional shifts. While these costs are gradually decreasing, Kasper said that they have yet to return to pre- COVID-19 pandemic levels, thus impacting the margin. He also noted an increase in general healthcare usage among employees.
"There’s a lot more pressure there than there had been in previous years,” Kasper said.
The Hospital of the University of Pennsylvania is currently facing a $183 million medical malpractice verdict, which is the single largest malpractice award in Pennsylvania history. The verdict was issued last year to a child born at the hospital in 2018 who suffered severe brain injuries at birth. In February, a Philadelphia judge rejected Penn Med's post-trial motions to have the verdict decreased or the case dismissed, upholding the original verdict.
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