Temple University Hospital is getting a one-time payment of more than $4.8 million in state and federal funds as the lone qualifier for a new class of disproportionate share payments being established by the Pennsylvania Department of Public Welfare.

Disproportionate share payments are made to hospitals that treat high volumes of low-income patients covered by the state's Medicaid program -- also known as medical assistance (MA).

DPW said, in state documents, the additional class of disproportionate share hospital payments will be for acute-care general hospitals "that provide a high volume of MA births to ensure the continued access to obstetrical services for MA patients."

Temple University Hospital is the only medical center in the state to meet the criteria for the additional funds, which will consist of $2.2 million in state general funds and $2.64 million in matching federal funds.

Robert Lux, vice president and chief financial officer for the Temple University Health System, said Temple last year determined it was losing $25 million a year because of shortfalls in government payments for costs associated with delivering babies and other obstetrical services.

"We've seen a steady growth in births at the hospital over the past couple of years, largely the result of program closures at other places," Lux said. "This is an area where our expenses exceed what we are paid, to a large extent because of the cost of professional liability insurance.

"Last year, we went to the state and said, 'We are losing a lot of money in this program, and we need to know if there is anything you can do to help.'"

The number of babies delivered at Temple University Hospital has climbed from 4,800 in fiscal 2004 to an estimated 6,200 in fiscal 2007, which ends June 30. A majority of the births at the hospital involve patients covered by Medicaid, or without any insurance.

A study released last year by the Philadelphia-based Maternity Care Coalition found since 1997 the number of births in the five-county region has remained steady at about 50,000 per year. During that same time, the study found, 13 Philadelphia and suburban hospitals have discontinued obstetric services.

The most recent closure occurred at Frankford Hospital, which shuttered the maternity ward at its Torresdale unit last summer. The space was converted to a 29-bed medical-surgical unit.

According to the study, most hospitals are getting out of the obstetrics business because of the escalating malpractice insurance costs combined with the expense of staffing labor floors at all hours without having the ability to predict occupancy levels.

The funding comes at a time when Temple is struggling with its bottom line.

The health system posted a net loss of $17 million in fiscal 2006. Lux said the loss was actually $31 million because the financial statement includes a $14 million state medical education payment that passed through the health system en route to Temple University. This year, he said, the health system has budgeted for a $27 million loss. Lux said the actual loss is expected to be about $40 million when the medical education payment is factored into the equation.

Stacey Ward, a DPW spokeswoman, said the funding allocation was approved by the state legislature as part of Pennsylvania fiscal 2007 budget.

The criteria used by DPW to determine which hospitals qualified for new funds was based on providing obstetrical services and meeting thresholds tied to their ratio of medical assistance nursery days to total nursery days; their ratio of medical assistance discharges to total discharges, and their level of uncompensated care.

Temple University Hospital, DPW officials acknowledged, is the only hospital in the state that meets all three thresholds.

In previous interviews, DPW officials said specific conditions are established for special payments to hospitals -- even if just one hospital meets the criteria -- in order to comply with Medicaid regulations governing matching federal funds.

Lux said the funding is similar to other state grants Temple health system hospitals, as well as other hospitals in the state, have received for costs incurred when providing care to a high volume of insured and uninsured patients.

Temple University Medical Center will also share in another new class of disproportionate share hospital payments DPW established Dec. 31 for general hospitals with burn centers to "assure readily available and coordinated burn care of the highest quality" to the medical assistance patients.

Six hospitals -- Temple, St. Christopher's Hospital for Children in Philadelphia, Crozer-Chester Medical Center in Upland; Lehigh Valley Hospital in Allentown; Mercy Hospital of Pittsburgh; Western Pennsylvania Hospital in Pittsburgh -- will share $11 million in state and federal funds being allocated for the burn centers.

Ward said the amount of funds each hospital will receive has not yet been finalized.

Learn about the childbirth crisis through our Maternity Care in Southeastern PA pages, or visit our Maternity Services Advocacy pages to find out how communities are advocating and how you can take action!

MCC's full Childbirth at a Crossroads report can be viewed here.