Becker's ASC Review

29 HEALTHCARE NEWS 29 'Collaboration will reduce the cost': Penn Medicine CEO talks mergers, margin improvements By Madeline Ashley F rom maintaining a positive ratings outlook to having an engaged workforce, Kevin Mahoney, CEO of the University of Pennsylvania Health System, part of Philadelphia-based Penn Medicine said overall, 2023 was great for the health system, and for 2024, it's about continued margin improvement. "We remain focused but positive," Mr. Mahoney told Becker's. "Our margin is about two and a half percent right now. For Penn Medicine to work, the health system needs to generate about 4% or higher because of the number of transfers we make over to the university to support research and education." Most recently, the University of Pennsylvania Health System, a six- hospital system part of Penn Medicine, signed a nonbinding letter of intent to merge with Doylestown (Pa.) Health. "ey'd be our seventh hospital. We have about a dozen criteria we go through: market, reputation, quality, financial stability, geographic representation. So that's an area of Philadelphia that we've not had as many assets, so we'll push forward on that this year," Mr. Mahoney said. Mr. Mahoney said Penn Medicine and Doylestown have been affiliated for decades, and while its board had initially wanted to stay independent, Penn Medicine maintained an open-door policy for the nonprofit health system. "We always said if you get to a point where you don't think you can stay independent, the door's open. Yesterday, they walked through. We've known each other for a long, long time. e due diligence and everything will go very smoothly," Mr. Mahoney said. Mr. Mahoney told Becker's that, along with the proposed merger, Penn Medicine has upcoming plans to break ground on a large ambulatory center and a $400 million cancer center. "Keep moving. I don't think this is a time in healthcare to tuck tail," he said. Like many hospitals and health systems, Penn Medicine has faced recent challenges with overwhelmed emergency rooms. "at is something that we are sharply focused on, how we can handle those volumes in an efficient, high-quality way," Mr. Mahoney said. Moving forward, Mr. Mahoney urges other healthcare leaders to take a step back and focus on collaboration. "We compete on everything. One person puts up a billboard, everybody puts up a billboard. We need to take a step back. What are the items we need to compete on and what are the items that we should collaborate on, because collaboration will reduce the cost." Like what you see? All executives featured in this article will speak at the Becker's Academic Medical Center Leadership forum April 8-9 in Chicago. Hospital and health system leaders, click here to apply for a complimentary badge. Interested in exhibitor or sponsorship opportunities to connect with 3,000+ hospital and health system leaders? Download the prospectus here. ank you to our sponsor ECG Management. n Rising uncompensated care costs have Denver Health at 'critical point,' CEO says By Andrew Cass D enver Health is pushing for more state and federal funding as it grapples with ballooning uncompensated care costs, NBC affiliate KUSA reported Jan. 9. CEO Donna Lynne, DrPH, told city and county leaders that Denver Health lost $60 million from uncompensated care in 2020, which doubled to $120 million in 2022, according to the report. In 2023, Denver Health — Colorado's only safety net hospital — lost $136 million, with $35 million of that coming from patients who live outside the city. Dr. Lynne said "Denver Health is at a critical, critical point," and it is being forced to take drastic measures to meet financial demands. She said the system has managed to face the challenges by closing beds, according to the report. "To me, that's abominable," she said. "I don't want to do that. But because our operating costs exceed what our revenues are, we are turning down patients every day, particularly in the area of mental health and substance abuse." Dr. Lynne said Denver Health also has reduced its employees' salary increases. Among the challenges the safety net hospital is facing is caring for migrants, according to the report. The hospital has seen 8,000 migrants for 20,000 visits, but there is no reimbursement for that care. She said although she has "tremendous compassion for what's going on — it's heartbreaking — it's going to break Denver Health in a way that we didn't even anticipate." n

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