West Virginia Hospital Profits Down in FY 1999

West Virginia hospitals' profit margins are "shrinking" due to rising costs, discounts to state and federal government insurance programs and increasing uncompensated care, according to a new report issued Nov. 12 by the state Health Care Authority. The study finds that although West Virginia's 63 hospitals had an aggregate profit of $74.2 million, they lost $77.5 million on patient services in fiscal year 1999, the Charleston Gazette reports. Since 1997, patient services income has decreased threefold, according to HCA Chair D. Parker Haddix. The report cites three main reasons for the declining profit margins. First, Medicare and Medicaid respectively pay 92 cents and 90 cents for every one dollar of a hospital's expenses on treating covered patients. The state Public Employees Insurance Agency pays 98 cents to every dollar. Combined, these programs cover 72% of all of the state's patients, a proportion which forces hospitals to pass costs onto patients with private insurance, who pay an average of $1.18 for every dollar of expenses. Second, due to the "soaring costs" of drugs used in psychiatric treatment, operating expenses of the state's psychiatric and rehabilitation hospitals nearly doubled in FY 1999. Third, uncompensated care, "which includes charity care to low-income patients and bad debts," was up 8.1% from the previous year (Kabler, Charleston Gazette, 11/13).