Medical Center expects to meet budget despite challenging economy

Penn State Milton S. Hershey Medical Center is on track to meet its 2008-09 budget when the current fiscal year closes June 30, despite a stagnant economy, lower than expected hospital admissions and increasing charity care costs. Dr. Harold L. Paz, chief executive officer of Penn State Milton S. Hershey Medical Center, Penn State’s senior vice president for health affairs and dean of Penn State College of Medicine, made the announcement at the annual public meeting of the Medical Center’s Board of Directors.

Paz told an audience of faculty, staff, students and community members that the Medical Center expects to post a 3.9 percent positive operating margin for the year, slightly ahead of the budgeted operating margin of 3.3 percent.

The Medical Center’s total margin for the year, which takes into account the cost of financial support for Penn State College of Medicine and non-operating income, is just under 1 percent, with net income projected to be slightly more than $7.8 million. The Medical Center uses its net income to invest in facilities, equipment and staff necessary to advance the organization’s education, research, patient care and community outreach missions.

“It has been a particularly challenging year. Through the hard work and commitment of our outstanding physicians, faculty and employees, and through the support of our community, our academic medical center is meeting its goals for the year despite the difficult economy,” said Paz.

Outpatient clinic visits and hospital admissions projections reflect slight growth in 2008-09, while the Medical Center’s surgical volumes for the year are higher than expected. Through May, the Medical Center outpatient visits are more than 752,000 for the year, less than a 1 percent increase over prior year volumes. Hospital admissions are more than 24,000, or almost 2 percent higher than last year at this time. Emergency department patient visits are more than 47,000 (a 3 percent increase) while total surgical cases were more than 23,000 through May (a near 7 percent increase).

Meanwhile, the Medical Center witnessed a significant increase in both charity care and bad debt, due to a larger number of indigent, uninsured and under-insured patients. Through May, the Medical Center’s charity care figures for the year are more than $18.2 million, nearly $2.2 million higher than a year ago. Bad debt -- patient medical bills that go unpaid -- is also up. Through May, the Medical Center’s accumulated bad debt was more than $21.2 million, also $2.2 million higher than the previous year’s total.

Paz said medical student applications to Penn State College of Medicine remain strong. Nearly 7,200 prospective medical students applied to Penn State’s medical school in 2009 for 145 available openings. The number of applicants is 1.3 percent higher than in 2008. Approximately one in six U.S. applicants to medical school apply to Penn State College of Medicine.

“Penn State College of Medicine remains a medical school of choice among the best and brightest future physicians,” said Paz.

In addition to growth in the number of applicants, Paz reinforced that the quality of Penn State College of Medicine students continues to compare favorably to national benchmarks. Penn State medical students have an average pass rate of 98 percent for step one of the U.S. Medical Licensure Examination (USMLE) compared to a national mean of 93 percent.