Becker's Hospital Review

25 CFO / FINANCE Advocate Health Care sees net income jump 36% By Ayla Ellison A dvocate Health Care, a 12-hospital system based in Downers Grove, Ill., saw its financial position improve in 2017, according to bondholder documents. The system ended 2017 with revenues of $6.2 billion, up from $5.6 billion in the year prior. Advocate saw net patient service revenue drop 6 percent year over year, but that decline was offset by an increase in capitation revenue, which nearly doubled year over year. After factoring in an increase in expenses, Advocate ended 2017 with operat- ing income of $219.7 million. That's down 16 percent from operating income of $263.6 million in 2016. Fueled by strong investment gains, Advocate's net income climbed 36 per- cent year over year to $811.3 million in 2017. On April 1, Advocate finalized a merger with Milwaukee-based Aurora Health Care. The combined system, called Advocate Aurora Health, will include 27 hospitals, have annual revenues of about $11 billion and serve nearly 3 million patients each year. n Hospital challenges union report suggesting charity care at Detroit Medical Center declined 98% under Tenet: 7 things to know By Kelly Gooch D allas-based Tenet Healthcare has significantly reduced charity care spending in Detroit-area acute care hospitals, the Michigan Nurses Association claimed in a report released March 21. Here are seven things to know. 1. For the report, the MNA examined data from Medicare cost reports submitted to CMS by Detroit-area hospitals. ey said they found charity care spending in Tenet Detroit Medical Center declined 98 percent over the course of three years. e report stated Tenet DMC spent $470,000 on chari- ty care in 2016, down from $22.9 million in 2013 — the year Tenet purchased DMC from for-profit Vanguard Health Systems. 2. e MNA said Southfield, Mich.-based Beaumont Health and Detroit-based Henry Ford Health System also saw charity care de- cline during that time period, although not as much. e union said they found Beaumont spent $26.6 million on charity care in 2016, down 67 percent from $79.8 million in 2013. At Henry Ford Health System, they said charity care spending declined 65 percent, from $55.7 million in 2013 to $19.3 million in 2016. 3. e MNA recommended the Legacy DMC Board include "a requirement that Tenet DMC set aside additional funds for charity care, greater access to information for pa- tients and the public, and appointment of an ombudsman to represent patient and com- munity concerns." Board President Joe Walsh told e Detroit News the board is looking into the union's allegations. 4. A part of the decline in charity care in Michigan hospitals can be attributed to the state's expansion of Medicaid under the ACA in 2013. Under the expansion, the state creat- ed the Healthy Michigan Medicaid program for low-income residents, which kicked off in 2014 and resulted in fewer uninsured pa- tients and less charity care spending. In 2014, charity care levels in the state were at $353 million. By 2016, that number had declined to $159 million, according to a study from Ann Arbor-based University of Michigan. Michigan Health and Hospital Association data also shows this trend, finding Medicaid expansion in Michigan through the insur- ance exchange and the Healthy Michigan Plan contributed to a statewide decline of charity care for fiscal years 2015 and 2016, the latest years for which data are available. e association also noted hospitals in Mich- igan at the same time saw additional bad debt in fiscal year 2016. 5. Tony Tedeschi, MD, CEO of the DMC, expressed disappointment in the report. He said in a statement to Becker's Hospital Re- view the union "has chosen to cherry pick numbers in their report that leave out es- sential information about how all hospitals across the state report uncompensated and charity care." He also called the report "an unfortunate attempt to characterize an is- sue that does not reflect the entire story. e American Hospital Association reports that hospitals incur two forms of uncompensated care — bad debt and charity care." "ese attempts by the MNA are intended to distract us from what is most important and that is our commitment to provide quality patient care to our community," Dr. Tedes- chi said. "We continue to work in good faith with the MNA and the Huron Valley-Sinai Hospital nurses to negotiate a contract that is fair. is is an insult to these hardworking men and women who work with the DMC as well as to those who rely on the DMC in their times of need. We are privileged and honored to provide critical services to all who seek care at our facilities. … while the DMC, in- cluding Huron Valley-Sinai Hospital, is now part of a larger, investor-owned health sys- tem, we continue to stand up for all who are in need just as we did when we operated as a nonprofit." 6. Dr. Tedeschi noted hospitals in Medicaid expansion sates have seen charity care de- cline, but DMC still provided more $112.3 million in charity care between 2013 and 2017. 7. Beaumont denied the assertion that it has reduced charity care. n

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