Healthcare Business News
 

Cone Health boosts operating margin to 2.6% by cutting costs


By Beth Kutscher
Posted: August 28, 2014 - 6:00 pm ET
Tags:

A focus on cost-cutting efforts helped mark a significant year-over-year improvement in Cone Health's fiscal third-quarter operating margin and net surplus.

The Greensboro, N.C.-based system, which has five facilities, is moving forward after a fiscal year when it witnessed rapidly rising expenses because of compensation and supply costs as well as the cost of integrating its latest acquisition, Alamance Regional Medical Center, Burlington, N.C.

Advertisement | View Media Kit

 

But after seeing an operating margin of less than 1% in the third quarter of last year, the system reported a 2.6% operating margin for the quarter ended June 30.

In total, Cone reported a net surplus of $21.5 million on revenue of $348.4 million. That compares to a net surplus of $10.3 million on revenue of $329.6 million.

While the overall story was positive, Cone said revenue was under budget because of a shift from inpatient to outpatient activity, largely driven by the two-midnight rule, a CMS policy change that makes it harder for hospitals to bill short stays at higher inpatient rates.

Its hospitals treated 3.2% fewer inpatients in the third quarter and performed 5.1% fewer surgeries. Outpatient visits, however, increased 9.6% year over year and emergency department visits were up 2.4%.

Cone also has carefully managed expenses, including labor costs. It reported 253 fewer full-time-equivalent employees, year to date, after opting not to fill vacant positions. It also came in under-budget on building, equipment and software maintenance.

Follow Beth Kutscher on Twitter: @MHbkutscher


What do you think?

Share your opinion. Send a letter to the Editor or Post a comment below.

Post a comment

Loading Comments Loading comments...

Search ModernHealthcare.com:


 

Switch to the new Modern Healthcare Daily News app

For the best experience of ModernHealthcare.com on your iPad, switch to the new Modern Healthcare app — it's optimized for your device but there is no need to download.