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Methodist Le Bonheur sees loss as start-up costs rise


By Beth Kutscher
Posted: May 14, 2014 - 1:15 pm ET
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Methodist Le Bonheur Healthcare reported a $2.5 million net loss in the first quarter of 2014 due to start-up costs associated with a new hospital and lower revenue per patient.

The Memphis, Tenn.-based system said the first quarter brought in fewer commercial and more self-pay patients (PDF) compared with the previous year, as well as lower reimbursement from the state's TennCare Medicaid program, which mandated a statewide redistribution of payment rates.

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The result was a 6.8% decrease in revenue per visit, even though total net patient service revenue increased 0.4% on higher volume.

Inpatient discharges increased 1.4%, but Methodist blamed high-deductible health plans for holding down commercial admissions. Tennessee is not a Medicaid expansion state, and Methodist said higher unemployment and limited enrollment in exchange plans also contributed to more self-pay patients.

However, outpatient volumes jumped 14.2%, with Methodist attributing 4.7% of the increase to a greater number of employed physicians and 3.4% to its new hospital in Olive Branch, Miss.

But the same factors that contributed to higher volume also drove up its expenses for the year. Salary and benefit expenses increased 10.2%, and supply costs, 6.1%, as the system added more clinicians to its payroll and also acquired more physician practices.

Methodist saw a $2.5 million loss in the quarter on revenue of $387.3 million compared to a $42.8 million surplus on revenue of $375.7 million in the first quarter of 2013. Its excess margin was 0.6%, compared with 8.8% last year.

Follow Beth Kutscher on Twitter: @MHbkutscher


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