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Regional News/South: Kentucky system's financials swing from loss to surplus


By Beth Kutscher
Posted: May 3, 2014 - 12:01 am ET
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The strategies Baptist Health implemented last year to improve its financials are paying off for the Louisville, Ky.-based system.

After reporting a net loss in fiscal 2013—and seeing a subsequent credit ratings downgrade from Fitch Ratings—the 10-hospital, not-for-profit organization produced a surplus in the first six months of its fiscal 2014, which began Sept. 1.

Although inpatient admissions were 6.3% lower than the first half of last year, Baptist saw a 2% increase in surgical cases and a 1.5% increase in deliveries. It also implemented standardized pricing across its hospitals and cut costs, particularly in staffing and supplies.

The combined effect was a positive operating margin of 2.4%, compared with a negative 0.8% margin during the first half of fiscal 2013. Baptist tapped Huron Consulting Group last year to turn around its financial performance. However, the system said that relationship is in its early stages, and the improvement was internally driven.

The system, located in a state that has honed in on signing up uninsured individuals for Medicaid and private insurance, also reported a 30% decline in uninsured patients during the quarter ended Feb. 28. Its charity care, bad debt and uninsured discounts similarly decreased 6.8%.

Baptist reported a six-month surplus of $24 million, compared with a loss of $7.9 million for the first half of fiscal 2013. Revenue also increased to $1 billion from $929.1 million during the prior-year period.

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However, the system continued to struggle with its physician-integration efforts, which also had dragged down earnings last year. Losses from its physician practices and clinics increased $6.5 million, or 4.6%, in the second quarter, compared with the prior-year period.

The group said it added 12 new physicians in the second quarter and 49 since Feb. 28, 2013. New and expanded practices brought in 11,000 new patient encounters and nearly 3,000 outpatient-surgery cases, according to the system's financial report.

Baptist said that employing physicians remains “one of the pillars of success” in its long-term strategic plan, and that it remains committed to expanding its network of employed physicians in preparation for population-health initiatives.

Follow Beth Kutscher on Twitter: @MHbkutscher


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