BJC Health System, the St. Louis powerhouse, lost $24.5 million on operations in the year ended Dec. 31, 1999, according to an audited financial statement it released last week. Adding in a restructuring charge and write-offs, the operating loss swelled to $70.6 million.
However, investment income, capital gains and transfers from BJC's philanthropic arm for capital projects narrowed the loss to just $4.2 million.
The fact that 13-hospital BJC is losing money on operations is not that surprising, however. It lost money in 1998, too. That year it lost $5.3 million on operations, after restructuring charges, but posted net income of $36 million overall.
What's surprising is that the system published its audited financial results almost as soon as they were certified correct by its accounting firm, Ernst & Young. Many not-for-profit hospitals and hospital systems don't reveal their finances, except as required in their Medicare cost reports, which are normally filed about a year after the end of the fiscal year, and in their annual Form 990 filings with the Internal Revenue Service, which become publicly available long after the fact.
However, hospitals' willingness to volunteer financial information to the public seems to be growing as their financial situations deteriorate and their industry lobbyists push for Medicare and Medicaid payment relief.
BJC, for example, has never released its audited financial statements before.
"This is a first," said Mary Phelan, BJC spokeswoman.
Steven Lipstein, BJC's new president and chief executive officer, said he doesn't think it's that unusual.
Lipstein replaced Fred Brown, who stepped down as president and CEO in 1998. Brown, who still serves as vice chairman of the system, is this year's recipient of the American College of Healthcare Executives Gold Medal Award (See story, p. 74).
"Most of the institutions where I've worked, the audited financial statements are available in the public domain," Lipstein said. "I don't think we had anything to hide this year in the release of our financial information."
On March 15, Lipstein sent an e-mail message to the system's 23,000 employees that included a quick summary of the financial results.
"I've been here 90 days, I wanted to communicate what my preliminary views are on how we did last year," he said. "I also wanted to communicate to them the fiscal realities of the healthcare industry at this time. We need their cooperation to manage our resources."
In his message he talked about the negative financial impact of the Balanced Budget Act of 1997, private insurance cutbacks and BJC's growing patient census.
Lipstein also released the audited financial results to local media. The St. Louis Business Journal wrote an article about the system's financials.
"It's not unusual to find that the media has access to and is reporting about financial results of hospitals in their communities," he said, citing public discussions about financial problems at UCSF Stanford Health Care, the University of Pennsylvania Health System and others.
What those hospitals have in common, however, is that all are posting steep losses and laying off hundreds of employees. Bond-rating agencies are issuing reports of downgrades, which are available to the public.
The University of Pennsylvania, for example, eliminated 20% of its workforce, or 2,800 full-time equivalents, after losing $158 million last year.
Richard Gundling, technical director of the Healthcare Financial Management Association, said many hospitals publish an annual summary or report to the community, which contains summary financial data.
BJC "is going a little further, but going in the same vein. It's great," he said.
Lorie Doyle, chief public affairs officer at the Penn system in Philadelphia, faxed summary financial results of that hospital's most recent year at MODERN HEALTHCARE's request last week.
"We always make this available," she said. "It's a public document. We don't usually get requests for it from the public, but if a reporter requests it, we provide it."