New report shows financial struggles of former First Hospital

A financial report released by a health care watchdog Thursday shows the defunct First Hospital of Wyoming Valley struggled in its final year, and was in declining fiscal health for at least several years before closing.

The Pennsylvania Health Care Cost Containment Council posted its “Financial Analysis 2022 Volume Three,” which focuses on “non-general acute care hospitals,” including those offering rehabilitation, psychiatric, long-term acute care and specialty services.

Individual facilities are separated into regions. Region 6 covers Luzerne and eight other counties in the Northeast corner of the state. First Hospital was among four non-state affiliated facilities in Region 6. Others were Allied Services, John Heinz Rehab and PAM Speciality services, a for-profit program set up on one floor of Wilkes-Barre General Hospital.

Data for PAM Specialties was incomplete. Of the other regional facilities, all three showed negative total margins — meaning they spent more money than they received — in fiscal year 2022. This happened despite the fact that, statewide, facilities in the report showed an average total margin in the black, taking in more money than spent.

While most facilities run fiscal years from Jan. 1 through Dec. 31, the report notes some — including First Hospital — operated on a different fiscal year, most likely from July 1 through June 30. In those cases the 2022 data came from the fiscal year that ended in 2022.

First Hospital closed in October 2022. The building reopened this fall as Wyoming Valley Behavioral Health Hospital, under new ownership.

A proper comparison requires splitting the three hospital into two categories. Allied Services and John Heinz are rehabilitation facilities, while First Hospital was a psychiatric facility. The distinction is necessary because statewide data for the two categories are different.

Allied Services has a total margin of -20.78%. John Heinz Rehab’s was -5.5%. Statewide, rehab facilities had a positive average total margin of 4.43%. The data looks better when three years of numbers are averaged. Statewide, rehab facilities saw a total margin of 7.86%. For Allied Services, the number was positive across three years at 1.61%, while for John Heinz it was about the same as for 2022 alone: -5.98%

First Hospital had a total margin in 2022 of -35.71%, compared to a state average for psychiatric facilities of 3.13%. The three year data shows First Hospital posting an average total margin of -7.77%, compared to a statewide average of 0.87%

The report also provides Net Patient Revenue and Total Operating Expenses for facilities for four years, putting some specific dollar numbers behind the total operating margin percentages.

From 2019 through 2022, statewide the average revenue for psychiatric facilities rose from $29 million to $33 million, while it dropped by more than half for First Hospital, from $25 million to $12 million. Average total operating expense statewide rose from $29 million to $34 million, but dropped for First Hospital from $24 million to $17 million.

For rehab facilities, the state average revenue rose from $36 million to $40 million while average expenses rose from $35 million to $39 million. For Allied services revenue went from $30 million to $25 million while expenses dropped from $37 million to $31 million. For John Heinz, revenue went from $24 million to $21 million while expenses went from $32 million to $26 million.