Becker's Hospital Review

19 CFO / FINANCE Partners HealthCare's annual operating income soars 489% By Ayla Ellison B oston-based Partners HealthCare saw its operating in- come rise in fiscal year 2018 despite a decline in reve- nue, according to financial documents released Dec. 7. Partners saw operating revenues dip 0.5 percent year over year to $13.31 billion in fiscal year 2018, which ended Sept. 30. The health system's significant growth in provider rev- enue was partially offset by a decline in insurance reve- nue. Partners said the decrease in insurance revenue was attributable to the transition of members from Medicaid managed care programs into the new MassHealth ACO program in March 2018. After accounting for a 2.4 percent decrease in expenses, Part- ners ended fiscal 2018 with operating income of $309.9 million. That's up 489 percent from a year earlier, when the health sys- tem posted operating income of $52.57 million. Partners reported a 2.3 percent operating margin for fiscal 2018, up from a 0.4 percent operating margin in the year prior. "While a 2-3 percent margin is slim compared to our peers across the nation, it enables us to reinvest in patient care and provide for the future capital needs of our hospitals and facili- ties," said Peter K. Markell, treasurer and CFO of Partners. After factoring in nonoperating income, Partners ended fiscal 2018 with net income of $826.6 million, up from $659.1 mil- lion in fiscal year 2017. n Envision, UnitedHealthcare extend contract: 5 things to know By Morgan Haefner U nitedHealthcare and Nashville, Tenn.-based Envi- sion Healthcare, one of the country's largest provid- ers of emergency room services, agreed to extend their contract, effective Jan. 1. Here are five things to know: 1. Under the agreement, UnitedHealthcare members will have in-network access to hospital-based services offered by Envision physicians. 2. Christopher A. Holden, president and CEO of Envision, said in a prepared statement, "We believe this is an oppor- tunity for clinicians and payers to work together to make progress toward a more effective healthcare system." 3. On Sept. 21, UnitedHealthcare sent letters to more than 250 hospitals warning them it may drop Envision from its network starting in 2019. More than 1 million United- Healthcare members would have been affected by the contract termination. 4. UnitedHealthcare was ready to terminate its contract with Envision in April. At the time, UnitedHealthcare ar- gued Envision wrongfully sued the payer and by doing so broke an arbitration clause in their agreement. The insurer also called Envision's emergency room billing practices "egregious." In March, Envision sued UnitedHealthcare for allegedly lowering contracted payments to Envision physi- cians and not allowing new Envision medical practices to join its network. 5. Surprise medical bills continue to be a controversial is- sue between payers and providers. On Dec. 10, nine orga- nizations representing consumers, businesses and health insurance providers revealed they are banding together to protect patients from unexpected medical bills. But Feder- ation of American Hospitals President and CEO Chip Kahn and American Hospital Association President and CEO Rick Pollack said the alliance is mischaracterizing the root of the issue, and inadequate health plan provider networks are a root cause of surprise bills. n Healthcare spending hit $3.5T in 2017 By Emily Rappleye G rowth in national healthcare expenditures slowed to 3.9 percent in 2017 due to slower spending growth across most categories, including hospital care and physician services, according to CMS data first published by Health Affairs. Here are five quick takeaways: 1. National healthcare spending hit $3.5 trillion in 2017, which equates to $10,739 per person. 2. Healthcare spending accounted for 17.9 percent of gross do- mestic product in 2017, on par with 2016's 18 percent share of GDP. 3. Growth in spending declined for the second year in a row. At 3.9 percent, healthcare spending growth was almost one percentage point lower than in 2016, when it grew 4.8 percent. 4. 2017 marked a continued decline in "use and intensity" of healthcare, bringing growth down to post-recession rates, ac- cording to CMS. Healthcare spending growth spiked in 2014 and 2015 as more Americans gained insurance via the ACA exchanges and Medicaid expansion, and expensive retail pre- scription drugs, like those for hepatitis C, hit the market. 5. Growth in hospital spending slowed to 4.6 percent in 2017 from 5.6 percent in 2016. Physician and clinical services saw a similar deceleration, with a spending growth rate of 4.2 percent compared to 5.6 percent in 2016.

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