Hospital Bottom Lines Rebound

Hospital finances in Pennsylvania fared better in 2010 than they have since 2008.

The latest report from the Pennsylvania Health Care Cost Containment Council (PHC4) finds total operating margins at hospitals statewide rebounded last year to 5.26% after falling to 2.03% in 2009. PHC-4 spokesperson Stephanie Suran says more of the increase can be traced to a stronger economy and a rebounding stock market than to more stable operations. “Most of the increase can be attributed to an $883 million increase in non-operating income,” says Suran. That was about three quarters of the total increase in income.

Non-operating income includes, among other things, charitable contributions and growth in endowment investments. Looking solely at operating income, margins moved from 3.53% in 2009 to 4.36% in 2010. Operating margins at southwestern Pennsylvania hospitals were slightly lower overall than the statewide numbers.

Suran says many hospitals work on such tight margins that the small increase on average was enough to push many hospitals into the black. “About one quarter of hospitals in Pennsylvania lost money in 2010, this is an improvement from the previous year when 45 percent of the state’s hospitals had negative bottom lines,” says Suran.

The cost of uncompensated care continued to pull down the margins. Pennsylvania hospitals lost $891 million dollars to uncompensated care last year. Suran says much of that can be traced to uninsured patients. Rates for uncompensated care were slightly lower in the counties surrounding Allegheny County than in the rest of the state.

PHC4 began tracking hospital data in 1996. Since then the trend has been for increased operating margins with dips from 1997 to 2001 and again from 2007 to 2010. Uncompensated care dipped through the first part of the 2000’s but has been steadily rising since it hit a trough in 2005.

The study also includes hospital stay data. Statewide inpatient days dropped from 9.39 last year to 9.14 in 2010. The statistic has been on a steady decline since 1996 when it stood at nearly 11 days. The same trend can be found when it comes to length of stay. The average hospital stay in Pennsylvania was 6.04 days in 1996 and has fallen to 5.22 in 2010.

The full report can be found here.

PA Exports Rise 22.5% from 2009

Pennsylvania exporters shipped out $34.8 billion in goods and services in 2010, indicating a big jump in the state’s economy.

Pennsylvania followed the national trend of increased exports, but posted especially impressive numbers, according to Tony Ceballos, Director of the U.S. Commerical Service Office in Philadelphia.

Ceballos says state’s top exports were chemicals, machinery, and metals – items used by other countries for production of their own goods.

Canada remained Pennsylvania’s top trading partner, accounting for almost a third of the state’s exports. However, exports to China also boomed, increasing 73% to eclipse Mexico as Pennsylvania’s second largest export market.

Ceballos says not only is the increase in exports a good indicator of economic health, but exporters also create good jobs.

“Exporters tend to hire more, they tend to pay their employees more and tend to have a higher rate of growth,” says Ceballos. "A lot of companies we work with have said that if it wasn't for exports, they would've had to lay off a lot of people and in some cases would've gone under."

Ceballos says the nation's exports increased 17% to $1.8 trillion, the largest yearly uptick in more than 20 years.

Protesters to March and Rally Against War

VisitPittsburgh: Convention Bis Is Up

Visit Pittsburgh says it booked 472 meetings in 2010 and beyond representing an estimated $286 million in spending. The numbers were released at the group’s annual meeting this morning. VisitPittsburgh Vice President for Sales and Marketing, Craig Davis says that is an increase of nearly 15% from 2009. The organization also reported the convention center was used 205 days last year, up from 191 the year before.

Davis says it is getting easier to market the city to convention planers. “The city is bigger, brighter, cleaner and our convention hotels that have come on board in the last five or six years have been incredible quality hotels and that has helped us sell tremendously,” says Davis. He says VisitPittsburgh also got a great deal of help from the “Bring it Home” campaign that calls on Pittsburghers who serve on national or international boards to push for their group’s conventions to be held in the city. “Because Pittsburghers are so proud of their city we get no problem getting people to help us.”

Looking out to the future, Davis notes several large conventions have been booked including the NRA convention in April of this year and the Veterans of Foreign Wars of the United States (VFW) and the Fraternal Order of Police (FOP) conventions in 2015. The VFW convention is expected to bring in 12,000 visitors.
And the FOP event will mark the 100th anniversary of the founding of the organization in Pittsburgh.

Davis says the tourism marketing focus last year was on Cleveland. Pittsburgh and Cleveland cross-marketed in each other’s region and Davis says visits from the Cleveland area jumped 51%. The 2011 focus will be on the Great Allegheny Passage, which is a biking and hiking trail that connects Pittsburgh to Washington DC.

Hosting the NHL Winter Classic also helped to boost tourism numbers. Davis says the event is believed to be responsible for 15,789 room nights and $22.3 million in spending.

NGL’s Cause Bottleneck in Marcellus Shale

As more gas wells are drilled into the Marcellus Shale, more pipelines to carry the gas to market are being laid by companies that specialize in what is known as the “midstream.” However, during this week’s Marcellus Midstream conference at least one investment banker thinks there is a missing component.

When natural gas comes out of the ground it is usually known as wet gas because as much as 20% of it is made up of compounds other than methane. Before the gas can be put onto interstate transport lines and eventually pumped into your home it must be separated. Mark Huhndorff is a Managing Director at the investment firm Raymond James and Associates. He says not being able to process or transport Natural Gas Liquids or NGL’s is causing a bottleneck in the Marcellus Shale. “The options are to build more processing plants or to take the NGL’s and transport them down to processing plants located elsewhere,” says Huhndorff.

The bulk of the NGL processing facilities in the US are in the Gulf Coast. “You pick anybody that’s involved in the Marcellus midstream [and they are] looking at that as a need,” says Huhndorff, “To address that need they are either going to build takeaway pipelines or a processing plant.”

Huhndorff says he has seen continued strong investment in midstream infrastructure in the Marcellus Shale and he expects it to continue. He says he thinks there is a great deal of money to be found in the capital markets that would be interested in backing such investments.

Among the compounds processors get when they process wet gas is ethane. Ethane has long been used as a feedstock for petro chemicals. Entrepreneurs are looking for ways to use the ethane to run equipment used in the gas fields including compressors. Propane, butane and hexane are also often found in wet gas.

Life Sciences Greenhouse Gets New Home

The Southside is now home to the Pittsburgh Life Sciences Greenhouse. The 10-year old organization left it’s building on Second Avenue for a new “campus” at the River Park Commons Business Center. Greenhouse CEO John Manzetti says right now they are providing space for about a dozen incubator companies.

Manzetti says the lease in the old build was coming up for renewal and they looked at all areas of the region before landing on the south side. He says he wanted to be near the universities, near the companies working in the life sciences field and still have reasonable rental rates.

The new building will not only hold the greenhouse’s administrative offices and its clients, it will also be home to two venture capital firms and a pair of bio science companies. “To allow them to see what is going on in our greenhouse portfolio and actually see some companies up close and personal for the purposes of partnering with them, investing money in the case of a venture capital firm, or maybe investing in technology they think is important for their growth,” says Manzetti.

Manzetti says another advantage of the new location is the ability to expand. He says they have more space in the buildings that they are currently occupying and have access to other buildings in the area.

The Commonwealth of Pennsylvania, University of Pittsburgh, Carnegie Mellon University, University of Pittsburgh Medical Center and Pittsburgh’s regional foundation community, founded PLSG as a public/private partnership in 2001. It provides startup capital, building space, and access to qualified personnel and connections to other companies to emerging technologies.

Revenues Up But Big Deficit Still Looms

Pennsylvania’s tax revenue continues to come in above estimates.
The Department of Revenue collected 73-million more dollars than it expected to in January, bringing year-to-date tax revenue 264 million dollars above projections.
House Appropriations Chairman Bill Adolph, a Republican, says the numbers are “great news,” but tempers his optimism.

"Even if it’s – I think it’s a little over 200 million right now over projections. That may be 400 million by June 30th. When you’re looking at a 4 billion dollar deficit, those projections are not going to fill that hole."

Adolph says things are slowly turning around.

"That’s four straight months, I believe, in increased revenues over projections. It’s much better than the previous 26 months, when we were below our projections. I think nationwide you’re seeing a very slow recovery."

This time last year, Pennsylvania was 374 million dollars behind estimates. Two years ago, the budget gap was 1.1 billion.
Corporate, sales and income taxes are all slightly above estimates, though table games revenue at casinos is 17 percent off the projected mark.

Population and Activity Grow Downtown

More people live downtown and more workers are using the bus to get there. Those are among the findings released Monday by the Pittsburgh Downtown Partnership as part of its regular surveys of downtown activity. In 2000 there were about 3,000 people calling the Golden Triangle, the North Shore, the Strip District and the Bluff home. That number jumped to 7,200 in 2010. PDP President and CEO Michael Edwards says the economy slowed the growth, “we had, in the pipeline, when the economy crashed, about 4,500 more units of housing… that were scheduled to be built in the area that we are talking about, and those have been delayed or not gone forward. If they had gone forward there would be another 5,000 people living downtown.”

The study finds the average household size increased to 1.5 people and one-third of residents have annual incomes of more than $100,000. Edwards says that is reflective of the relatively high cost of housing in the Golden Triangle but he notes there is some very affordable housing in the Strip and other places. The study also finds that the “peak age group” downtown is 25-29 and 4% of households include children.

The study also looks at those who come downtown on a regular basis but do not live there. Edwards says the average commute to downtown is 13 miles or 36-39 minutes, 4 in 10 commuters are age 35 or younger and 53% of commuters use public transportation. In 2003 the number was 48%. Edwards notes that the increase comes, “despite all the busing cut backs over the last few years.” He says, “I think it is really reflective of the increased cost of gasoline, the increased cost of parking, the more efficient bus system that people can get their heads around and understand.”

The study asked weekend users why they come downtown and among the top reasons was a never before seen response, “to work out and to exercise.” “Its because of the plethora of new biking trails and running trails and parks and things that have been delivered by RiverLife, the foundation community and others,” says Edwards. The PDP has started to use those amenities as it tries to attract residents and new businesses.


Other interesting fact in the study:
• Weekly average spending at Downtown restaurants/retailers by downtown residents: $183
• Two-thirds of Downtown workers are employed in Service or Finance industries
• Downtown employee count by industry class and census track: 126,370
• Liberty and Penn Avenue are heavily populated with workers, while the Boulevard of the Allies is mostly traveled by students
• Market Square and Fifth Avenue are seeing increased traffic and are among the busiest pedestrian areas due to recent revitalization
• Weekday foot traffic peaks at 8:15 a.m.; 12:15 – 12:45 p.m. and from 4:45 – 5:15 p.m. Largest peak is during the “lunch hour”

Download a PDP published summary sheet on the finding here.

Builders Association Still Says No to Sprinklers

The Pennsylvania Builders Association had hoped the Pennsylvania House would follow the Senate’s lead and delay the January implementation of mandated sprinkler systems in all new one- and two-family homes, but that didn’t happen. The industry thinks the requirement may depress an already struggling construction sector.

According to Public Affairs Director Melissa Etshied, the PBA will promote new legislation in 2011 that calls for a permanent moratorium on mandated sprinklers and a change in the makeup of the Review Advisory Council.

Etshied says the council that mandated sprinklers did not include any proponents of affordable housing, so the PBA would like to see more people who understand the ramifications of code requirements.

With hard-wired smoke detectors already required, Etshied says the significant cost of a sprinkler system should be up to the consumer.

PNC Sees ‘Moderate and Stable’ Econ in 2011

After coming out of what he calls “frustratingly slow progress” in 2010, PNC economist Robert Dye says southwestern Pennsylvania’s economy will be “moderate and stable” in 2011. Dye says the slowdown in the summer now looks to have been a “soft patch” rather than the beginning of a double dip recession. He says the relatively good numbers seen in recent months should build momentum in 2011 with a little more growth, a slow drop in unemployment, and pickup of the housing market slack. However, Dye says, “it will not be a ‘snap back’ economy.”

Dye says the education and medical sectors will continue to lead the region’s economy and help to moderate bad economic news and he says the energy and banking sectors will also help to drive the economy. Dye says Marcellus Shale exploration and extraction will be a “game changer” going forward. He says as the world economy rebounds, demand for energy will grow and so will the value of the shale fields. He admits that there are still political hurdles to clear in Pennsylvania and in some municipalities but he says those will shrink as the potential for economic impact from Marcellus Shale drilling grows.

Dye believes southwestern Pennsylvania’s financial sector will benefit from the region’s better than average growth in 2011. “Being able to provide services to this wide variety of medical and educational, high-tech energy resources, and the growing service sector at large, is providing many opportunities or companies,” says Dye. Dye also feels companies in the region working with nuclear power will see growth in the long term. “We have a missing generation of nuclear power plants,” says Dye, and as the world gets more comfortable with the idea of nuclear power demand will start to grow.

Commodities, Performers and Birds Drive Christmas Price Index

The national economy may have been sluggish in 2010 but the Christmas Price Index, produced every year by PNC, surged 9.2%. The index looks at the price of the items mentioned in the song ‘The Twelve Days of Christmas.’

The price tag for the gifts comes in this year at $23,439. That is $1,974 more than last year. PNC Wealth Management managing executive Jim Dunigan says it was the second highest jump ever. Usually the rate of increase is very close to the National Consumer Price Index, which grew just 1.1 percent over the year. Dunigan says there is precedence for the jump. He says over the 27-year history of the index you seen times when the nation is just coming out of a recession and the Christmas Price Index jumps back faster than the Consumer Price Index. In 2003 the index rose more than 15 percent. “So I think coming out of a recession you start to see different baskets of goods, certainly the Christmas Price Index is a unique basket, that may in fact have larger increases,” Says Dunigan.

The Christmas Price Index inched up a modest 1.8% in 2009.

“This year’s jump in the PNC CPI can be attributed to rising gold commodity prices, represented by the Five Gold Rings which went up by 30 percent, in addition to higher costs for wages and benefits impacting some entertainers,” says Dunigan. Among the 12 gifts in the PNC CPI, only four items (Pear Tree, Four Calling Birds, Six Geese a–Laying and the Eight Maids-a-Milking) were the same price from last year.
The 11 Pipers Piping and 12 Drummers Drumming saw modest increases of 3.1%. The biggest dollar increase this year was for the Nine Ladies Dancing, up $820, (up 15%)

The “True Cost of Christmas,” which is the total cost of items as they are repeated, is also calculated annually. If your True Love went that route, he or she would be facing a $96,824 bill. That is a 10.8% increase compared to last year.

PNC also looks at the price of gathering the gifts on-line. The Internet cost this year went up 9.2% and was $11,000 more than this year’s traditional index. “In general, Internet prices are higher than their non-Internet counterparts because of shipping costs for birds and the convenience factor of shopping online,” says Dunigan.

All of the data and a graphic presentation can be found online. Lesson plans for teachers and projects to do at home can also be found on the site.

Jobs In The Region

The Three Rivers Workforce Investment Board released their labor market information comparing data from this past October to October of last year.

Non-farm jobs grew by 4,500, mostly in the sectors of health care, retail, administrative, and computer operations. There was a slight decrease in the construction sector. Although it was higher than last year, it was a decline from recent months.

"The growth between August and September was about 10,000 new jobs so in comparing to that 4,500 new jobs between September and October seems slower," said
Vera Krekanova, Research Manager at the organization.

She added that there are about 45,000 online job postings in the Pittsburgh Metropolitan Area. Although they take into account eight counties, the majority of those jobs are in Allegheny County and within that, most are in the city of Pittsburgh.

1,000 Weatherization Workers Trained, 1,000 to Go

Pennsylvania is more than halfway toward its goal to help nearly 30,000 low-income homeowners improve their energy efficiency and reduce costs through the federal stimulus program.
Pennsylvania’s Weatherization Assistance Program provides energy retrofits to low-income homes and Governor Ed Rendell says the state is making great progress...

"Work that creates jobs, conserves energy and reduces costs for homeowners...Those homeowners are now saving an average of $600 each year on their energy costs. But this effort is about more than simply saving energy and money; this Recovery Act-funded initiative is boosting local economies across the state."

The Governor said more than $22.3 million has been invested so far in materials and supplies for the weatherization initiative.
The weatherization work is coordinated through the Department of Community and Economic Development, the Department of Labor & Industry coordinates all weatherization training. Individuals performing weatherization work for the program must be certified to ensure that work done on a consumer’s home is completed safely and provides the greatest possible energy savings.

More than 1,000 workers have already been trained over the last year and a new round of federal grants will help prepare 1,000 additional weatherization installers, crew chiefs and auditors across the state in the coming year. The governor said these job skills will carry well into the future.

Seven recipients will use a total of $799,000 in federal stimulus Act funds to continue providing weatherization training to students. The Community College of Allegheny County is receiving a $100,000 grant.

Prospective students should contact their PA CareerLink for enrollment information.

Delay Sought in Safety Mandate

The Pennsylvania Builders Association is hoping the General Assembly will pass legislation today delaying a requirement that all new one- and two-family homes include automatic sprinkler systems as of January 1st.

Melissa Etshied of the Pennsylvania Builders Association, says at issue is the right of the consumer to choose whether to install a sprinkler system that can add thousands of dollars to the cost of construction. Most do not so choose, she says. The group does support hard-wired, interconnected smoke detectors that have been required by Pennsylvania’s Uniform Construction Code for several years. Etshied says most fires are in older homes that don’t have working smoke detectors.

There’s an economic argument as well, says Etshied, because building a home can involve up to 54 different types of businesses, and the extra cost of a sprinkler system may lead potential customers to decide against building. In a down economy, Etshied says government should be making it easier, not harder, to build.

The State Senate passed such legislation in late October.

Veterans Group Launches "Buy Veteran" Marketplace

Consumers looking to buy from businesses owned and operated by veterans will now be able to search for where to shop. The National Veteran-Owned Business Association, in celebration of Veterans Day, set up BuyVeteran.com where consumers can look through businesses locally that are run by veterans. This comes after a 2009 poll revealing that 95% of Americans trust veterans because of raining under a strict code of ethics.

Lorenzo Buford, Chief Executive Manager of Buford Enterprises International and local veteran, says that the site helps encourage Americans give to veterans after they're home. "It's like buying back into America in a sense because every veteran has given their blood, sweat,and tears in different wars...This is the perfect situation where America can now give the veterans the respect that they deserve."

Buford also says he believes that website will help veterans make up for business lost because of the economy. He says that one of the major problems that veterans face is not being educated in finding contracting work with the government and most rely on private sector business for income.

People looking to search Veteran companies or to purchase "Buy Veteran" gear can go to www.buyveteran.com. Consumers can also look for the "Veteran Owned Business" badge on storefronts while out shopping.

Onorato Talks Economics at Pgh. Training Center

Democratic gubernatorial candidate Dan Onorato visited a vocational training facility in Pittsburgh today, praising the site as an important part of Pennsylvania’s economic recovery.

The Pittsburgh Job Corps is training about 350 youths in 10 vocational programs, including healthcare, energy, and maintenance. The center also helps students get college degrees from the Community Colleges of Allegheny and Butler Counties.

Onorato says sites like this are part of his four-point plan to turn around the state’s economy.

“One of those four points is making sure that our Votech schools, our community colleges, our training facilities, our four-year degree colleges, that we have curriculums that match the needs of our companies or the industries that we have today and what we expect to have tomorrow,” says Onorato. “When you see placements of 90% to 100% depending on what field here, it’s working.”

The Allegheny County Executive says he also wants to lower the corporate tax, and make the state more attractive to businesses by loosening Department of Environmental Protection and Department of Transportation regulations. He says as governor, he would try to close loopholes that allow corporations to avoid corporate taxes.

August is Agritourism Month in PA

Governor Ed Rendell hopes his proclamation of "Agritourism Month" will boost awareness of agricultural operations, events, and activities as well as promoting tourism in the state. PA Department of Agriculture Spokesperson Justin Fleming says Agritourism blends two of the state’s top industries- tourism and agriculture. He says PA is the nation’s fourth most visited state and it claims a top five ranking for several agricultural products. Fleming says the 115 county and community fairs are a great way to make a connection between the food on your table and it source.
55 fairs are held in Pennsylvania during the month of August. Fleming says there are other great day trips and weekend getaways that feature agriculture including a long list of wineries, farm markets, and working farms that host overnight visitors in bed and breakfast settings. The state has launched a web site to help travelers make the agritourism plans. Fleming says many of the travel ideas are not only fun and interesting but also easy on the budget.

In Pennsylvania, agriculture is a $61 billion industry and tourism is responsible for bringing in $27 billion a year.

Pgh-Cle High-Speed Train Explored

Pittsburgh has popped up on a list of cities that Ohio officials would like to see linked into its still-being-built passenger rail system. Ohio expects to link Cincinnati, Columbus and Cleveland with a 79 mile an hour train by 2012 and the Ohio Rail Development Commission has signed a $7.8 million contract with the Los Angles based engineering firm AECOM to assess what would need to be done to institute 110-mph passenger trains on four routes, including Cleveland to Pittsburgh. The work is being funded through a federal grant. Commission spokesperson Stu Nicholson says the study will look at routes, environmental impacts and ridership. In January the Whitehouse announced that Ohio will be given $400 million in federal funding for the three-city high-speed rail link, which is expected to host 478,000 riders in the first year of operations. Nicholson says extending spurs from the “Ohio Hub” is the next logical step. A spur from Cleveland to Toledo is also being explored. Nicholson says building such lines will take a mix of funding sources including federal transportation dollars. He says he thinks interest in high-speed rail has grown in Washington DC as the debate over climate change and energy independence intensifies. It is still unclear who would operate the spurs.

PA's Jobless Rate Holds Steady

Pennsylvania's seasonally adjusted unemployment rate for June was 9.2%, unchanged from May compared to the national rate of 9.5% last month.
The labor force, the total number of employed and those looking for work, declined by 27,000 in June. Troy Thompson, spokesman for the State Department of Labor and Industry, says the number of jobless Pennsylvanians declined by 1,000 in June, the first drop in that category in 2 and a half years. However, that decline is likely due to the decrease in the labor force with some people giving up looking for work at this time.
Thompson said in June the number of non-farm jobs dropped by 6,300 but countered that Pennsylvania has added a net 64,200 jobs in 2010. That compares to a loss of 143,300 jobs for the first half of 2009.
Thompson said the professional and business services sector added 5,400 jobs in June..."That's where you see your temporary employment agencies. That is definitely a good sign. It shows employers are testing the waters. We usually see that sector show an increase during a recovery as employers move towards being able to hire full-time workers. First they make those temporary hires."

Marcellus Workforce Training

The federal government has awarded a $5 million grant to train workers in Pennsylvania, Ohio and West Virginia for jobs in the Marcellus Shale drilling industry. The Allegheny Conference on Community Development (ACCD) is partnering with Westmoreland County Community College, 4 other community colleges, Workforce Investment Boards and the Pennsylvania Independent Oil and Gas Association to create a Marcellus training network.
Laura Fisher, ACCD Senior Vice President of Special Projects, says this is one of the last federal stimulus grants awarded by the Department of Labor and "they are very supportive of proposals that will put people into jobs quickly."
41 awards totalling $125 million were made nationwide for community-based job training for high growth industries. The "ShaleNet" proposal received the largest grant.
Fisher says a key factor in winning the grant is that much of the Marcellus drilling is in rural areas where there is higher unemployment and low income levels and that meshes with the goals of the Labor Department in job creation.
Fisher says that 70% of the drilling workforce is not local...many of those workers are from Texas, Oklahoma and Wyoming where there is much more experience in shale drilling. She says that the drilling companies would actually prefer to hire local residents because it would be more cost effective.
Fisher says the potential environmental problems is a concern and she's glad that the "bad actors" in the industry are being "called out" but there is also a high level of environmental responsibility among other companies.
"We feel getting local workforce into these jobs...these people live in these places, they're not going to want to have an environment polluted or damaged by irresponsible corporate behavior."
Westmoreland County Community College will help develop the criteria for training and certification programs. Fisher says some of the training will be at the drill sites and could be completed in several days to a week.

Listen to DUQ's Kevin Gavin's interview with Laura Fisher