CHICAGO – Nearly 1 in 20 Americans older than 50 have artificial knees, or more than 4 million people, according to the first national estimate showing how common these replacement joints have become in anFORT WAYNE – Lutheran Hospital was the 11th most profitable large hospital in the country last year, according to a study by Forbes magazine.
The local hospital had a 30 percent operating margin on $431 million in net patient revenue, the study found. The median hospital profit margin was slightly below zero, according to Forbes, which released results of the study this week.
Flowers Medical Center in Dothan, Ala., ranked first with a 53 percent operating margin on $389 million in net patient revenue. Both Flowers and Lutheran are owned by Community Hospital Systems in Brentwood, Tenn., a for-profit chain of hospitals.
Ten non-profit hospitals also made the Top 25 list, including Ohio State University’s hospital and two Mayo Clinic hospitals.
Rocketing health care costs prompted President Obama to sign a massive health care overhaul into law in March. Although hospital costs add to that total price tag, some people contend that well-run hospitals will inevitably make a profit.
“I really believe that if we take care of patients, business takes care of itself,” said Joe Dorko, Lutheran Hospital’s CEO.
Dave Ridderheim, retired Parkview Hospital CEO and one-time deputy mayor to Graham Richard, said successful hospitals can reinvest in the community.
“Is profit a bad word? I think that depends on what happens to the profit,” he said from his home Thursday afternoon.
Dorko, who is also interim CEO of Lutheran Health Network, said the only way investors in Community Hospital Systems can make a profit is if they buy stock in the company and its price goes up. The company doesn’t distribute profits to shareholders.
“I’m really proud that’s the company’s position, that we don’t pay dividends,” he said.
Ridderheim made his comments about profit before learning which local hospital appears on the Forbes list. After hearing it’s his former rival, he declined to pass judgment, saying he doesn’t know enough about how Lutheran distributes the money.
The Forbes study doesn’t detail how hospitals use profits, a significant omission in Dorko’s opinion.
“It’s good to be successful because it allows us to be good players in the local community,” he said.
This is Lutheran Hospital’s second appearance on a notable list this week. The state on Monday released a scorecard for 306 hospitals and ambulatory surgery centers. The Indiana Medical Error Reporting System’s fourth annual report collected data on 28 types of reportable events.
Lutheran Hospital reported two serious medical errors last year – one surgery performed on the wrong body part, and one death or serious disability associated with medication error. In 2008, the hospital reported zero.
The health care provider’s investments in the community are varied, including jobs, taxes and non-profits.
Lutheran Health Network is a major local employer, with more than 5,350 full-time equivalent jobs in Allen County.
Community Hospital Systems is also creating construction jobs by investing in $60 million of upgrades for Lutheran Hospital this year.
In July, the hospital began erecting a $42 million addition that will add a fifth floor to the building. The additional 96 rooms, which will allow the hospital to offer all private rooms, are scheduled to be completed in December 2011.
Lutheran Hospital paid more than $8.3 million in local taxes last year. The total comes to more than $15 million of taxes paid in the region for the network. Total charitable contributions in 2009 were almost $3.9 million for Lutheran Hospital and more than $8 million for Lutheran Health Network.
Officials also track how much care was given but not paid for. Those totals were $33.6 million for Lutheran Hospital last year and more than $117.6 million for the local network.
Spokesman Geoff Thomas said Lutheran officials are reviewing the Forbes list and the calculations it was based on. He pointed out that bad debt was not subtracted from profits.
All the hospitals were evaluated according to the same criteria. But Thomas questions whether other health care providers were serving areas facing similar economic hardship as Fort Wayne and provided more than $33 million of care that wasn’t paid for.
Parkview Hospital, part of Fort Wayne-based, non-profit Parkview Health, was not on the Forbes list, which was based on data from the American Hospital Directory.
Parkview spokesman John Perlich declined to comment on Lutheran Hospital’s inclusion. But he restated Parkview’s commitment to reinvesting in the community while providing high-quality health care.
