The Ohio State University Medical Center has recovered from a $42.6 million deficit two years ago to show a profit for the first time since 1999.

A preliminary report released yesterday by medical center officials indicated a $2.8 million revenue during the OSU fiscal period covering July 1, 2001 to June 30, 2002.

“The turnaround for the health system is significant,” said R. Reed Fraley, vice president for health services and chief executive officer of the OSU Health System, in a press release. “It is unusual in the health care industry — or just about any industry — to recover from that kind of deficit in just 24 months without drastically cutting services.”

Fraley said hospital revenues grew by 27 percent over the last two years, while expenses increased by 17 percent.

The medical center profit was generated despite the federal Balanced Budget Act of 1997, which, among other things, reduces Medicare reimbursements owed to hospitals.

Medical center officials are hopeful that the government will lessen Medicare reimbursement restrictions, thus alleviating their financial burden.

“We are hoping Congress will restore some of the cuts,” said Richard Schrock, chief financial officer for the medical center. “There is a possibility they may restore some of those cuts. We would encourage that on their part.”

Schrock said hospitals across the country imposed additional charges to health care plans like Health Maintenance Organizations and Preferred Provider Organizations to help compensate for the financial strain caused by Medicare reimbursement reductions.

An increase in patient volume at the medical center was also responsible for the turnaround, he said.

Sue Jablonski, associate vice president for health sciences, said the leadership conducted by the medical center’s administration should perpetuate positive financial development.

“What you have seen over the last three years has been patient care, teaching and research coming together,” she said. “I think you’ll see nothing but continued growth. It will be one of the top-tiered academic medical centers in the country.”

She said the 2004 projected completion of the $82.8 million Richard Ross Heart Hospital, in conjunction with the construction of a $151 million biomedical research center planned to open five years from now, will expand employment for researchers and support personnel.

The Ohio State University Medical Center encompasses the College of Medicine and Public Health, the Davis Heart and Lung Research Institute, the Comprehensive Cancer Center, the James Cancer Hospital and Solove Research Institute, University Hospitals, University Hospitals East and OSU & Harding Behavioral Healthcare and Medicine.