When the Pennsylvania Health Care Cost Containment Council published its latest financial performance report for state hospitals this week, one of the figures that jumped out was the net loss posted by a suburban Philadelphia medical center that is typically among the most profitable in the region. Lankenau Medical Center, a 331-bed tertiary care center in Wynnewood, finished fiscal 2017 with a net loss of just under $1.4 million.

That’s a stark difference from the previous three years when Lankenau – part of Main Line Health – posted profits of $47.9 million in fiscal 2014, $83.9 million in fiscal 2015, and $19.1 million in fiscal 2016, writes John George in the Philadelphia Business Journal.

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Jack Lynch, the president and CEO of Main Line Health, said the downturn at Lankenau is symptomatic of the struggles all health care providers are facing in today’s health care environment where most hospitals have to deal with inadequate reimbursement rates and new models of reimbursement. As a system, Lynch said, Main Line Health was profitable, but it missed its budget target by 50 percent.

“Overall the whole industry is seeing pretty big changes in margin performance,” he said.

Lynch said reimbursement rate increases received from payers, primarily government health programs and commercial insurers, are “far less” than the rate of increases the health system incurs for operating costs such as salaries, pharmaceuticals and medical devices.

A large cost the Main Line health incurred, and will continue to incur, is tied to the implementation of its new Epic electronic health record and billing system. “That’s going to add $200 million to $300 million in expenses over the next 10 years.… We think over the long-term it will help us be more efficient, but in the short term it will have a pretty big impact on costs.”

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