Healthcare Business News

City of Hope grapples with higher expenses, ends Providence partnership talks

By Beth Kutscher
Posted: August 26, 2014 - 3:15 pm ET

City of Hope, the not-for-profit comprehensive cancer center, reported that smaller gifts and an increase in its expenses led to a tighter operating margin in the first nine months of its fiscal 2014, which ends Sept. 30.

The Duarte, Calif.-based organization, which receives about 10% of its revenue from its fundraising efforts, saw contributions decline 23.7% compared with the first nine months of the previous year. However, it said fiscal 2013 was boosted by a particularly large pledge, and its fundraising team has a strategy of focusing on major gifts as a way to lower fundraising costs.

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Patients, however, continued to seek care at the cancer center, with City of Hope reporting that new patient visits increased 4.3% year over year. Outpatient visits, including infusions, increased 7.6% and outpatient surgeries were up 4.1%.

While City of Hope said most service lines saw higher utilization, inpatient days declined 5.5% and bone marrow transplants decreased 9.3%.

Despite the stronger volume overall, City of Hope, like all providers in California, lost out on revenue from the California provider fee program, which expired in December and needs to be reapproved by the CMS. Patient-care revenue, therefore, was flat year over year.

Expenses, on the other hand, shot up markedly. Excluding costs related to the California provider fee program, City of Hope saw a 7.4% increase in expenses in the nine-month period. The higher volume, and particularly the higher number of infusions, led to increased pharmaceutical and supply costs. The cancer center also incurred higher compensation costs year over year.

City of Hope is undertaking a nationwide search for a new chief philanthropy officer following the resignation of Kathleen Kane at the end of the fiscal year. Paul Blodgett, senior vice president of major gifts, will fill in on an interim basis.

On the partnership front, City of Hope ended discussions with Providence Health & Services to form an oncology alliance in Southern California after their letter of intent expired on May 31.

In July, City of Hope signed an asset purchase agreement to acquire a 10-physician group with five locations in Southern California’s Eastern San Gabriel Valley and Inland Empire area.

Follow Beth Kutscher on Twitter: @MHbkutscher

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