Issue link: https://beckershealthcare.uberflip.com/i/961245
58 CFO / FINANCE Why this Georgia health system is transitioning into a nonprofit By Alyssa Rege T he Hospital Authority of Ti County, which operates Tion, Ga.-based Ti Regional Health System, unanimous- ly voted Feb. 21 to restructure the health sys- tem into a charitable nonprofit. Here are four things to know. 1. Officials are restructuring the health sys- tem to ensure "strategic flexibility" in the changing healthcare market, according to a Feb. 22 statement from Ti Regional. Doing so would also allow the hospital to treat pa- tients outside county lines, which is where most of the health system's patient population comes from, according to Ti Regional Presi- dent and COO Christopher Dorman. "Only 50 percent of Ti Regional's patients come from Ti County. e other 50 percent comes from our 11 surrounding counties and beyond. Having a regional presence allows us to offer [additional] services ... normally reserved for larger metropolitan cities. By expanding our scope of services and service area, we envision offering additional special- ties in the future," he said. 2. Jimmy Allen, chairman of the Hospital Authority of Ti County, said Ti Regional is late to the game in terms restructuring into a nonprofit. "About 16 percent of Georgia's 159 hospitals still operate under a hospital authority. Most hospitals converted to a 501(c)(3) organiza- tion years ago. Our current structure under a hospital authority has its advantages, but it can also constrain outreach and growth," said Mr. Allen. 3. Mr. Allen said the health system's current board will remain in place while subsidiary boards will oversee the organization's acute care services, physicians services and popula- tion health management initiatives. 4. e restructuring process will take approx- imately one year. n Geisinger more than doubles net income in first half of FY18, but sees operating margin slip on health plan By Morgan Haefner D anville, Pa.-based Geisinger Health System report- ed net income of $324.9 million in the six months ended Dec. 31, 2017, compared to net income of $129.7 million in the same period the year prior. However, Geisinger's health plan pulled down the nonprofit system's operating margin due to federal insurance changes. Geisinger recorded $61.2 million in operating income for the first half of fiscal year 2018, up 17.9 percent from $51.9 million in the same six-month period a year prior, accord- ing to recent financial documents. At the same time, the system's operating margin fell from 3 percent to 1.8 per- cent when comparing the three-month period ended Sept. 30, 2017, to the six-month period ended Dec. 31, 2017. Geisinger Health Plan, the system's health insurance arm that sells policies on the ACA exchange, was to blame. GHP missed out on $11 million in cost-sharing reduction pay- ments from the federal government in the second quarter of 2018, according to Geisinger. President Donald Trump's administration ended the cost-sharing reduction pay- ments — which helped offset the cost of providing health insurance to low-income Americans purchasing plans on the ACA exchanges — in early October 2017. GHP expected the change to begin correcting on Jan. 1, when an average 31 percent premium rate increase kicked in for plan members. Geisinger added its second quarter operating margin was negatively affected by volatility in the individual exchange. "The individual exchange product volatility is believed to have occurred as a result of members, fearful of a possible [Affordable] Care Act repeal, seeking unusually high levels of medical services before the expiration of their calendar year policies," the system said. Year over year, Geisinger reported an 8.1 percent increase in revenue for the six-month period to $3.3 billion. Geising- er attributed the incline to an uptick in net patient revenue, aided by increased market share and capture of high-acu- ity volumes. The system's health plan also generated 11.4 percent more revenue in the six-month period compared to the same period in fiscal year 2017, primarily from rate increases. n