Cooper hospital buoyed by cancer center

Cooper University Health Care, even before its takeover last month of emergency medical services in Camden, was flexing its muscles in South Jersey's thriving health-care market.

Long a center for complex care in South Jersey, but hampered by its location in poverty-stricken Camden, Cooper has been expanding since 2012, opening a new patient tower, a medical school, and the MD Anderson Cancer Center.

The payoff shows in rising patient revenue and strong gains in operating profit, though an expert doubts that it can last. Cooper had $886 million in patient revenue last year, up from $672 million five years ago. Cooper's operating income rose to $46 million from $17 million in the same period.

Cooper's chief executive, Adrienne Kirby, said the biggest factor in Cooper's improved performance recently was the cancer center, which opened in October 2013 with significant financial help from the state.

"We have seen a tremendous growth in our patient visits and also in our referrals of complex cancer patients," Kirby said.

The number of cancer patients at Cooper increased 23 percent, to 3,200 last year from 2,600 in 2013, Cooper said. By comparison, Penn Medicine had 12,134 cancer patients in the year ended June 30, 2014.

While most cancer care is done on an outpatient basis, cancer and other complex surgery have helped Cooper buck the trend of declining inpatient volume. Cooper's hospital admissions have climbed each of the last three years, reaching 27,859 in 2014, since they fell to 24,737 in 2010.

"I think that's their strategy, to beef up their [specialized care], get more referrals, and stop the out-migration to Philadelphia," said Standard & Poor's credit analyst Cynthia S. Keller. "That's what more than anything is triggering the volume increases."

Cooper's suburban competitors in South Jersey are also doing well. Virtua remains a financial stalwart, among the most profitable systems in New Jersey. The Kennedy Health System has surged.

It's harder to evaluate the Lourdes Health System. Lourdes is part of Trinity Health, a Catholic system with operations in 21 states, and does not disclose comparable financial information.

South Jersey hospitals appear to be operating in a bubble, not facing the sorts of declines in admissions and payments that have hurt hospital finances in other markets, said Alan Zuckerman, president of Health Strategies & Solutions Inc., a Philadelphia consulting firm.

"Unless there's something incredibly unique or bizarre about the market, which I don't think there is, the bubble is going to burst," Zuckerman said.

Regarding Cooper's cancer gains, Zuckerman said affiliates of MD Anderson, the Houston-based cancer hospital, typically experience an initial bump in patients. "Then it becomes yesterday's news."

Kennedy, like Cooper, has had five years of rising patient revenue, with the exception of 2013, when it was out-of-network with the insurer Aetna. The system's chief financial officer, Gary Terrinoni, said the improvement had come from the revenue and the expense sides.

In addition, Terrinoni said, Kennedy and other New Jersey systems have benefited from the Medicaid expansion under the Affordable Care Act, while state charity-care subsidies were not cut until July 1.

One aspect of Cooper's approach to the health law was to pay $8.5 million for a 20 percent stake in AmeriHealth Insurance Co. of New Jersey. As part of that deal, AmeriHealth created a plan that offered consumers lower, out-of-pocket costs at Cooper facilities.

"We've seen 10,000 covered lives each of the two years that program has been in effect," Kirby said.

This year the program expanded to allow participants to get lower-cost basic care at Shore Medical Center in Somers Point and at Cape Regional Medical Center in Cape May Court House.

"That program allows for community-level care that stays local," Kirby said, with complex cases coming to Cooper. "That's our key strategy."

As to the strategy behind the EMS takeover, Cooper officials have repeatedly said Camden residents will get better service with Cooper in charge.

Zuckerman said there could be some improvement for patients, but there is more to it. "If you control the EMS network, then you can deploy it better to your own ends."

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