Becker's Hospital Review

24 CFO / FINANCE Edward-Elmhurst's Operating Income Plummets 90% in FY 2017 By Ayla Ellison E dward-Elmhurst Health, a three-hospital system based in Naperville, Ill., saw revenues increase in fiscal year 2017 but ended the pe- riod with significantly less operating income than in the year prior. e system reported revenues of $1.37 billion in fiscal year 2017, which ended June 30, up from rev- enues of $1.25 billion in fiscal year 2016, according to recently released bondholder documents. However, rising expenses offset the system's reve- nue gains. Edward-Elmhurst's expenses rose 11.4 percent year over year to $1.37 billion in the most recent fiscal year. at growth was partially attrib- utable to higher supplies costs, which increased 20.7 percent year over year. e system's expenses related to salaries and wages were $545.23 million in fiscal year 2017, nearly 8 percent higher than in the year prior. Edward-Elmhurst ended fiscal year 2017 with op- erating income of $1.75 million, down 90.1 percent from $17.69 million in fiscal year 2016. "Higher expenses and an increased number of Medicare and Medicaid patients were the prima- ry causes of Edward-Elmhurst Health's fiscal year 2017 results," a system spokesperson told Becker's Hospital Review. "Strong patient volumes were also offset by an increase in bad debt due to pa- tients' inability to pay higher co-pays and deduct- ibles, and sharp increases in pharmaceutical and medical supply costs." To improve its financial picture, the system plans to lay off 84 employees and leave 150 other posi- tions unfilled. "While our volumes remain strong, we are paid less for every patient we see," wrote Edward-Elmhurst CEO Mary L. Mastro in an Oct. 4 memo to employees, obtained by Crain's Chicago Business. "Our expenses are growing faster than re- imbursement from Medicare, Medicaid and com- mercial insurance companies, and our operating income in fiscal year 2017 was the lowest since our merger." Aer factoring in nonoperating gains, the system reported net income of $92.62 million in the most recent fiscal year, compared to a net loss of $17.06 million in the year prior. n $200M Donation to UC Irvine for Alternative Therapy Meets Criticism By Alia Paavola C ritics are citing concerns over the $200 million donation to Uni- versity of California Irvine that will launch a new health program to promote integrative medicine, which combines alternative medi- cine, such as preventive medicine, therapeutic and lifestyle approaches, with conventional medicine, according to STAT. "This is ultimately a very bad thing. It's putting emphasis and the imprima- tur of a university on things that have been discarded as medical fraud for 50 years," Steven Novella, MD, a neurologist at New Haven, Conn.-based Yale University, told STAT. Other individuals in academia are raising red flags as well, including Tim Caulfield, a Canada-based University of Alberta health law professor, who argues the donation will legitimize invalid practices. Despite the criticism, the leaders behind the initiative, Howard Federoff, MD, PhD, CEO of UC Irvine's health system and Shaista Malik, MD, the director of UC Irvine's Center for Integrative Medicine, defended their approach. Drs. Federoff and Malik argue that since so many people seek alternative care, it means conventional medicine has lapses. In addition, the leaders behind the initiative claimed other medical schools were too slow to adopt alternative therapies that revealed prom- ise in clinical trials. They further defended exploring alternative medicine, suggesting it was time to transform healthcare to focus on a patient's full range of needs rather than just treating an illness, according to the report. "We take patient safety as our highest calling and we will never deploy any approach — integrative or not — that put patients at risk. Any non-prov- en or non-evidence based approach? We will not deploy it," Dr. Federoff told STAT. n Hedge Fund Takes Over Adeptus Health By Ayla Ellison L ewisville, Texas-based Adeptus Health, the largest operator of free- standing emergency rooms in the U.S., has emerged from Chap- ter 11 bankruptcy and has been acquired by New York City-based hedge fund Deerfield Management. "Deerfield is excited to join with the Adeptus team in its mission to pro- vide the highest quality medical care both in the communities currently served and those we will endeavor to serve in the future," said Alex Kar- nal, partner and portfolio manager at Deerfield Management. "The Adep- tus team has proven its resiliency, creativity and close connection through this difficult time, and I am excited for them to get back to what they do best, caring for patients." Adeptus filed for Chapter 11 bankruptcy protection on April 19. At that time, the company's financial resources were strained by expenditures associated with expanding its footprint. Immediately following the company's emergence from bankruptcy, CFO Frank Williams was appointed CEO of the reorganized Adeptus. n

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