Revenue at Palmetto Health, a four-hospital system based in Columbia, S.C., increased a modest 1.9% in the first nine months of its fiscal 2014, which ended June 30. The nationwide shift toward high-deductible health plans was a factor in lower commercially insured volumes and revenue, officials said.
Employers have increasingly shifted employees to consumer-directed health plans
that offer lower monthly premiums but higher annual deductibles. Many of the bronze and silver plans on the health insurance marketplaces also offer cheaper monthly payments in exchange for more cost-sharing. Since patients have to shoulder more of the financial burden in those types of plans, some have been putting off costly healthcare treatments. And Palmetto Health said it witnessed that trend so far this year.
“We're seeing a lot of elective-type procedures that are being delayed,” said Ben Cunningham, Palmetto Health's vice president of finance.
Total admissions in the system's first nine months of 2014 dropped 1%, while patient days essentially remained flat. Cunningham said the system is looking to help patients more with financing options when they seek treatment. Those options include collecting more money upfront and creating payment plans for patients who schedule an elective procedure in advance.
“We are moving toward asking more for payment at the time of service,” Cunningham said. “Once the patient is no longer in your hospital, it's much harder to collect it.”
Overall, Palmetto Health posted a $12.9 million operating loss in the first nine months of this year, compared with a $15 million surplus in the same period last year, according to the system's unaudited financial results
. Revenue in the nine-month time frame totaled $841.9 million versus $826.1 million in 2013.
The health system opened its 76-bed Palmetto Health Baptist Parkridge hospital in Columbia this spring, and Cunningham said the new hospital was the major contributor to the net operating loss. Parkridge Hospital mostly wrangled with higher labor costs, specifically overtime and agency staffing, he said.
“This is not uncommon when opening a new facility—the challenges of getting up and going,” Cunningham said.
He added that although Palmetto Health's operations have suffered so far this year, the balance sheet remains strong. He said the financial markets “have been very favorable,” and they've helped the system build a stable reserve. As of June 30, Palmetto Health had $19.3 million in cash and cash equivalents.
Palmetto Health's total surplus, which includes investment income, totaled $14.4 million, a 69% drop from the same nine-month period a year ago.Follow Bob Herman on Twitter: @MHbherman