Becker's Hospital Review

22 CFO / FINANCE Norton Healthcare's net income climbs 40% in FY 2017: 4 things to know By Morgan Haefner L ouisville, Ky.-based Norton Healthcare saw operating and net in- come grow in the fiscal year ended Dec. 31, 2017, compared to the previous year. Here are four things to know about the nonprofit health system's finan- cials, according to unaudited bondholder documents. 1. Norton Healthcare reported revenues of $2.2 billion in 2017, up 5 per- cent from $2.1 billion in 2016. e health system largely attributed the growth to an increase in patient service revenue and joint venture income. 2. At the same time, Norton Healthcare saw expenses grow 6 percent to $2 billion, compared to $1.9 billion in 2016. Salary and wage expenses grew 5 percent year over year for the health system, which was a major component of the uptick in expenses. 3. Greater total direct expense growth than total revenue growth resulted in a decline in EBITDA, from $219.5 million in 2016 to $205.9 million in 2017. 4. However, Norton Healthcare saw operating income increase 16 percent to $151.9 million, compared to $130.9 million in 2016, due to improved investment results. Aer including nonoperating gains, Norton Health- care ended 2017 with $200.1 million in net income, 40.2 percent higher than $142.7 million reported in 2016. n Methodist Health System's operating income climbs 29% in Q1 By Ayla Ellison M ethodist Health System, a 10-hospital, non- profit system based in Dallas, saw its financial picture improve in the first quarter of fiscal year 2018, which ended Dec. 31, 2017. The health system recorded revenues of $417.5 mil- lion in the first quarter of fiscal year 2018, up from $397.7 million in the same period the year prior. Methodist Health management attributed the in- crease in revenues to several factors, including patient volume growth and rate increases. The system said the number of inpatients, excluding observation and newborns, grew 24.3 percent year over year. Methodist Health's operating expenses totaled $372.2 in the first quarter of fiscal year 2018, up 2.7 percent from the same period of the year prior. The system said many factors, including patient volume growth and costs associated with Epic software implemented in April 2017, caused expenses to rise year over year. The health system ended the first quarter of fiscal year 2018 with operating income of $45.3 million, up 29 percent from $35.2 million in the same period a year earlier. n Study finds small link between hospitalizations and patient bankruptcies By Kelly Gooch B ankruptcy is still an issue facing some hospital patients, according to a study published in New England Journal of Medicine. For the study, researchers examined credit reports of more than 500,000 people hospitalized at a California facility between 2003 and 2007, according to Newsweek. The study found a small link between hospitalization and bankruptcy. Hospitalization was associated with approximately 4 percent of bankruptcies between 2002 and 2011, reported Newsweek. The rate among uninsured people was 6 percent. "Rates of medical bankruptcy are much, much lower than we had thought and has been claimed," Amy Finkelstein, a health economist at the Cambridge-based Massachusetts Institute of Technology and one of the paper's authors, told Newsweek. Ms. Finkelstein argues bankruptcy isn't the only patient financial issue the healthcare industry should look at. She believes policymakers should take into account patients' employment status and earnings, since many people face additional costs from missing work due to sickness, and may not be able to secure disability or employment insurance. A different study published in 2009 in the American Journal of Medicine found 62.1 percent of bankruptcies in 2007 were due to medical expenses. Researchers asked bankruptcy filers in 2007 about why they filed, and considered the bankruptcy "medical" based on their reasons, as well as their income loss due to illness and the amount of their medical debts. David Himmelstein, MD, a professor at Hunter College's School of Urban Public Health in New York City, told Newsweek he believes his study's approach provides a more overarching view of medical bankruptcy because Ms. Finkelstein's study "only count[s] you as having been ill if you were hospitalized [once over three years]. But we know that a huge number of people who were ill were not hospitalized." n

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