Health-care sector here looks sunnier for the most part


The health-care industry here appears on track to strengthen a bit overall in 2006, with some caveats, due partly to improved financial performance by the two major hospital systems here.


Providence Health Care (PHC) and Empire Health Services, after implementing a number of cost-cutting measures, both say theyve posted encouraging gains this year that they expect to add to next year.


Were quite optimistic about 06, says Ryland P. Skip Davis, CEO of both PHC and Sacred Heart Medical Center, which is part of the Providence system. He says Providence is projecting about a 4 percent net margin, a nonprofits equivalent to net income, next year, which is slightly higher than where it projects it will end up financially this year.


Were well ahead of budget from what we expected to do and are very pleased with the performance of PHC as well as Sacred Heart, he says.


Empire Health Services CEO Jeff A. Nelson says, We think 2006 will be a very good year for the company as a wholeits direction, its economicsas well as continuing to grow jobs in the market.


Empire expects to finish this year at least $2 million in the black, which represents close to a $35 million turnaround from last year, says Nelson. He was hired in October 2004 to lead turnaround efforts at Deaconess Medical Center and Valley Hospital & Medical Center.


Were optimistic. Were hopeful, he says.


Tom Corley, CEO of Holy Family Hospital, which also is part of the Providence network, says that North Side facility hopes to keep it about even next year with a net margin of 3 percent to 4 percent. Despite some gains, he says the health-care industry here remains under a troubling cloud from rising costs related to uninsured patients and inadequate funding of mental health services.


Kootenai Medical Center, in Coeur dAlene, is in strong enough financial shape that it has decided not to raise its rates in 2006, says Tom Legel, the hospitals chief financial officer.


Even without a rate increase, Legel says, Kootenai Medical Center expects its revenues will grow about 6 percent next year and it will post a 7 percent net margin. By comparison, it expects to end this year with revenue growth of about 15 percent and a net margin of about 8.5 percent.


The hospitals 2-year-old open-heart surgery program has really taken off this year, contributing strongly to the bottom line, and strong population growth in Kootenai County also has boosted its revenues, Legel says.