Allegheny Health Network trims losses as patient volume climbs

Allegheny Health Network shrank its losses during the first three months of the year, citing higher patient numbers and increased membership in its insurance units.

The 14-hospital system on Wednesday reported an operating loss of $36.2 million for the first quarter compared to a loss of $105.5 million during the same period last year.

Patient volumes — the combined total of discharges and observation cases — increased 10.3%, to 30,719 cases, during the first three months of the year.

That’s in part because people are no longer delaying procedures and other visits that had been put on hold during the height of the covid-19 pandemic, officials said.

“A lot of elective and other procedures have been deferred because of access during the course of the pandemic,” said AHN’s Chief Financial Officer James Rohrbaugh, who added that the health system has been investing in improving patient access to services. “I think that’s been a critical part of the volume recovery.”

Meanwhile, higher labor costs took a bite out of revenue. Those costs were driven by staffing shortages and higher wage rates due to using agency staffing, needs-based bonuses and overtime, the Pittsburgh-based health care system said.

Contracted labor costs rose $11.2 million to $54.3 million during the first quarter.

Highmark Health Plans, AHN’s insurance unit, saw an operating gain of about $130 million while enrollment climbed 2.5% annually.

“It’s been happening across the board with this exception of ‘Small Group.’ We’ve had very strong ACA (Affordable Care Act) results, very strong Medicare results, very strong commercial results,” said Daryl Veach, senior vice president and CFO of Highmark Health Plans. “To get that growth by reducing rates, we worked on our costs to be more affordable. And then also be responsible for keeping margins similar.”

Allegheny General Hospital expansion

On Tuesday, AHN presented a development plan for Allegheny General Hospital to the Pittsburgh Planning Commission. The plan includes the potential for new buildings on the North Side campus and a goal of making all hospital rooms single occupancy.

Mark Nussbaum, the hospital’s CEO, said officials frequently assess the hospital’s needs. The new master plan, he said, reflects the desire to modernize the hospital.

Allegheny General has 524 beds. It’s staffed by 800 physicians, 100 medical students and about 4,000 staff members, Nussbaum said.

The hospital admits about 24,000 patients a year and has about 300,000 outpatient visits annually. The hospital also sees more than 55,000 emergency department registrations each year and handles more than 23,000 surgical procedures.