Pennsylvania newspaper criticizes nonprofit hospitals' operating surpluses

The LNP editorial board said last year four of five nonprofit hospitals in Lancaster County, Pa., had operating margins about twice as high as what is needed to maintain financial stability, according to the publication.

The editorial board cited a recent report by the Pennsylvania Health Care Cost Containment Council. The report states nonprofit hospitals generally need an operating surplus of 4 to 6 percent to remain financially stable, although every case is different.

The board referenced Lancaster (Pa.) General Hospital's surplus, which has been rising since 2012. During the five-year period ended June 30, Lancaster County's dominant hospital had half a billion dollars more than it needed to cover expenses, according to LNP. Last fiscal year, Lancaster General Hospital had a 13.6 percent surplus, or $143 million. Nearby Hershey (Pa.) Medical Center had an 11.1 percent surplus last year, or $166.7 million.

"Yes, nonprofit hospitals serve the community — that's a requirement of maintaining their nonprofit status, and they earn substantial federal, state and local tax breaks to do so. Unfortunately, the community gets a little poorer every time someone tears open a hospital bill," according to the board.

Lancaster General Hospital spokesperson John Lines told LNP the hospital plans to invest $100 million every year for the next five years into new technology and facilities. "Those investments aim to strengthen the health of our community, lower readmission rates and improve clinical outcomes. This often leads to further lowering the total cost of care for our patients," he told LNP.

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