Becker's Hospital Review

19 FINANCE FINANCE Moody's: More Nonprofit Hospitals to Offer Health Plans By Erin Marshall T he number of nonprofit hospitals entering the health insurance business will continue to rise in the coming years to gain market share or reduce costs through improved healthcare manage- ment, according to a report by Moody's Investors Service. Creating a new plan or acquiring an existing one carries several risks, including harming cash flow margins, a shi in new managerial skills and intense competition. Nevertheless, the trend is expected to persist, particularly among larger systems that can absorb the costs. Key drivers of the trend include the Affordable Care Act, which encourages care coordination; continued focus on cost reductions; syn- ergies through greater economies of scale; and creating new revenue streams, according to Moody's. Although some nonprofit hospitals have successfully managed long-standing health insurance plans, they oen have ample cash re- serves to face insurance cycles and regulatory changes in the insurance business. n Dignity Health's Operating Income Jumps 47%, Net Surplus Tumbles By Ayla Ellison S an Francisco-based Dignity Health's operating income increased in fiscal year 2015, as the sys- tem's net patient service revenue and premium revenue grew. Dignity reported nearly $12.4 billion in reve- nue for FY 2015, up 16 percent from last year. The financial boost was largely attributable to a rise in the system's net patient service revenue and premi- um revenue, which increased 20.4 percent and 13.9 percent, respectively. The system's expenses increased 15.1 percent year-over-year, growing to $12 billion in FY 2015. Dignity ended FY 2015 with operating income of $423.3 million, up from $287.8 million the year prior. After accounting for a 74.1 percent drop in investment income, Dignity ended the most recent fiscal year with a net surplus of $557.9 million, down 37 percent from FY 2014. n Geisinger's Operating Margin Improves as Premium Revenue Increases By Ayla Ellison D anville, Pa.-based Geisinger Health System reported operating income of $159.8 million on revenue of $4.6 billion for the fiscal year that ended June 30, compared to operating income of $136.8 million on revenue of nearly $4 billion for FY 2014. The boost in the system's revenue in the most-recent fiscal year was partially attributable to a 22.5 percent uptick in net patient service revenue. Geisinger also reported its premium revenue grew 7.8 percent in FY 2015 compared to the year prior. The system ended FY 2015 with a 3.5 percent operating margin, up from a 3.4 percent operating margin in FY 2014. After accounting for a hit on its investments, Geisinger reported a net surplus of $194.8 million for FY 2015, down 54.5 percent from last year. n Carolinas HealthCare Expansion Efforts Pay Off in First Half of 2015 By Ayla Ellison C harlotte, N.C.-based Carolinas HealthCare System reported net operating revenue of $4.4 billion for the first half of 2015, up from $4.1 billion for the same period of last year. The system's strong fi- nancial performance is largely attributable to its focus on making it easier for patients to access care, according to a Charlotte Observer report. Patients are becoming more active in choosing where they receive medical care due to the growing popularity of high-deductible health plans. Some patients with high-deductible plans are looking for the lowest price, while others are looking for the most convenient place to receive care. Carolinas HealthCare is focusing on the convenient care portion of the equation. In recent years, the system has built urgent care centers, freestanding emergency departments and "destination centers," including clusters of primary care physicians, pediatricians and internists to make care more accessible, according to the report. In addition, Carolinas HealthCare also lets patients speak with physicians through virtual appointments using their mobile devices or computers. Expanding its reach across its service area has paid off for the system, as patient visits to its medical group increased 11.5 percent in the first six months of 2015 compared to the same period of last year. The system also reported inpatient discharges at its facilities were up 8.6 percent in the first half of 2015 over the same period of 2014. n FINANCE FINANCE

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