Healthcare Business News

WellStar operating surplus hit by winter weather, Epic conversion

By Beth Kutscher
Posted: June 4, 2014 - 3:45 pm ET

The unusually severe winter storms that hit the Atlanta region earlier this year cost WellStar Health System about $13.5 million in operating surplus last quarter.

The Marietta, Ga.-based system booked a smaller year-over-year operating margin when it reported earnings for the nine-month period ended March 31. However, WellStar attributed the difference to two one-time factors: converting all clinical systems to Epic Systems Corp.'s EpicCare and the harsh ice storms that brought the greater Atlanta region to a standstill.

“We were in the eye of both the January and February storms,” said Jim Budzinski, executive vice president and chief financial officer. “The incremental cost was substantial.”

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Not only did the five-hospital system see lower volume but it incurred additional costs in staffing up for the severe weather.

WellStar also incurred $24.7 million in expenses during the nine-month period related to training and implementation costs for the new electronic health-record system. During the prior-year period, it spent only $3.1 million.

“Once you understand our Epic costs coupled with the winter storms, you'll see our operating margins were very consistent” year-over-year, Budzinski said.

In total, WellStar reported a surplus of $70.3 million on revenue of $1.2 billion for the nine-month period, compared with a surplus of $101.6 million on revenue of just under $1.2 billion for the first nine months of fiscal 2013.

Its operating surplus for the period was $17.6 million, or $55.7 million before accounting for Epic and weather-related losses. Last year, its operating surplus for the period was $45.8 million.

Overall admissions were “consistent with prior-year levels,” Budzinski said, with outpatient activity up 2%.

He attributed the increase primarily to growth in the WellStar Medical Group, which had grown 25% to 440 physicians as of March 31. However, the system also booked higher salary and benefit costs associated with having more employed clinicians.

Georgia has not expanded Medicaid, and WellStar has not seen a difference in its uninsured rate of care, which was 10.7% in March 2014 compared with 10% in March 2013, Budzinski said.

Follow Beth Kutscher on Twitter: @MHbkutscher

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