Nov. 19--Health care services in Pennsylvania continue to move away from traditional hospital settings.

The number of licensed ambulatory surgery centers in the state more than quadrupled in the last decade to 261 from 61, according to a new Pennsylvania Health Care Cost Containment Council report released today.

"It is a national trend," said Mark Pauly, Ph.D., a health care economist at the University of Pennsylvania. "The number of procedures that can be done in these places has dramatically expanded."

The explosion of lucrative, free-standing clinics siphons revenue from cash-strapped hospitals.

"Any time you skim off some profitable procedures, it makes it harder for the hospitals to cover their costs," Dr. Pauly said.

The council, an independent state agency that compiles and analyzes health care data, also looked at the financial performance of rehabilitation, psychiatric and long-term acute care hospitals in the report.

But the growth in outpatient centers highlights a major shift in health care delivery.

"Part of this is entrepreneurship," said Daniel West, Ph.D., chairman of the health administration and human resources department at the University of Scranton. "The biggest driver is cost. "We've got to be able to do things in settings that are less costly because the reimbursements aren't there."

Total margins, or profit, at ambulatory sites increased an average of 1.75 percent in fiscal 2008 to 26 percent, the report concludes. Typical hospital profits are about 4 percent, according to the Hospital & Healthsystem Association of Pennsylvania, a Harrisburg-based trade group.

Many clinics provide pain management treatment and diagnostic services, such as biopsies and colonoscopies. Many shoulder, knee, eye and oral surgeries are done at ambulatory sites, which provide quick services that appeal to consumers.

"It's much less bureaucratic and people don't have to wait," Dr. Pauly said.

Clinic users give the facilities high marks for quality, care and customer satisfaction and insurance companies like the lower costs, Dr. West said.

"I think there's room for continued growth," he said.

The report excludes some regional centers because they did not submit data.

Many are partly or wholly owned by physicians. They also are more selective about who they treat. The rate of uncompensated care at state clinics last year was 0.44 percent, compared to 2.38 percent at hospitals, the report states.

"Many hospitals are losing money because many of their customers are on Medicare and Medicaid," Dr. Pauly said. "This is carving out of their profitable business."

Quick turnaround at Allied

Another section of the report says Allied Services had the shortest average length of stay among the state's 21 rehabilitation hospitals.

Average stays in 2008 at the Scranton-based nonprofit facility, which provides rehabilitation, vocational and human services, were 10.8 days, compared to the state 15.6-day average. Allied's sister facility, the John Heinz Institute of Rehabilitation Medicine in Wilkes-Barre Twp., had an average stay of 12.7 days.

"The efficiencies that come with a very good rehabilitation team make a big difference," said Greg Basting, M.D., Allied vice president for medical services. "You can focus on the patients' needs and how you address those needs and address the discharge planning. You don't compromise on care."

Allied recorded lower patient revenue and profit averages than other nonprofit facilities in its category.

Allied's three-year average change in net patient revenue decreased by 0.75 percent between 2005 and 2008, the report shows. Revenue at John Heinz increased 1.51 percent. The state average increase was 9.64 percent.

Jackie Brozena, a senior vice president at Allied, said revenue fell below the state average as Allied adjusted to new Medicare reimbursement regulations.

"We actually ended up having fewer admissions," Mrs. Brozena said. "That's why our net revenue went down."

Allied recorded a 4.8 percent profit in 2008, the report states, and profit at John Heinz was 0.94 percent. The state average among nonprofit rehab hospitals was 14.2 percent.

Allied reduced potential profit by providing high volumes of free care, Mrs. Brozena said.

"We're going to take that route rather than the bottom line," she said. "We're here to help."

Contact the writer: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

To see more of The Times-Tribune or to subscribe to the newspaper, go to http://www.thetimes-tribune.com/.

Copyright (c) 2009, The Times-Tribune, Scranton, Pa.

Distributed by McClatchy-Tribune Information Services.

For reprints, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it , call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.