Aug. 9, 2018
Dive
Brief:
- Scripps
Health reported strong growth in both operating revenue and operating
income during the third quarter of fiscal year 2018, but net income
plunged more than 75% due to shrinking investment income.
- The San Diego-based
nonprofit's operating revenue totaled $727.1 million, up from $659.7
million in Q3 2017, fueled by gains in patient volumes, outpatient visits
and larger provider fee revenue, according to unaudited financial documents. Operating
income climbed to $11.5 million, from $5.6 million in the same period a
year ago.
- But the rise in provider fees also
helped drive up Scripps' operating expenses, which grew 9.2% to $2.2
billion, from about $2 billion last year.
Dive
Insight:
Meanwhile,
realized and unrealized investment income fell by $7.8 million and $54.7
million, respectively.
The
result was a 77.4% year-over-year drop in net income — from $70 million to
$15.8 million in the most recent three-month period.
Many
factors are eating away at hospitals' bottom lines. Hospital operating
costs are rising, patient admissions are in decline and
medical cost increases are outpacing wage growth while
patients are facing higher deductibles.
To
make ends meet, healthcare organizations are looking at a range of cost-cutting
options, from workforce management and laying off staff to mergers and
acquisitions.
In
January, Scripps CEO Chris Van Gorder
informed employees that the health system would seek to lower
costs in part by shifting more patients from its five hospitals to outpatient
care. The reorganization also included an unspecified number of layoffs.
Van
Gorder said the move was necessary to remain competitive amid declining
reimbursements, higher patient deductibles and the overall trend toward
healthcare consumerism.
Other
major providers that have laid off staff in the past year include Ascension, Tenet Healthcare, Memorial Hermann, NYC Health + Hospitals and Summa Health.
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