Officials from Novant Health, of Winston-Salem, N.C., contend that 2000 will mark a financial turnaround for the nearly 3-year-old system.
That's because the factors that led to Novant's $80 million swing in profitability--from net income of $48 million in 1998 to a $32 million loss last year--were primarily one-time costs, they said. The system's net operating revenue jumped 11% in 1999 to $1.3 billion.
But Craig Kornett, director of the healthcare group for Fitch IBCA, a credit-rating agency, said he's eager to find out whether Novant has a management strategy to turn around more fundamental problems like physician losses, management turmoil and managed-care contracting problems that primarily manifested themselves in the system's Charlotte, N.C., market, he said.
Not-for-profit, seven-hospital Novant was formed July 1, 1997, when Carolina Medicorp in Winston-Salem and Presbyterian Healthcare System of Charlotte, merged. Since then, the system has had a bumpy ride.
Its two flagship facilities are 680-bed Forsyth Medical Center in Winston-Salem and 853-bed Presbyterian Hospital in Charlotte.
"They were two large systems merging," Kornett said. "I would have expected them to do better."
Kornett said ever since the merger, the system has had poor expectations from its Charlotte-area market. Specifically, there have been cash-flow concerns and billing problems, he said, in addition to tough competition for managed-care contracts from Carolinas HealthCare System, the market's other major player. Carolinas has 11 hospitals in North Carolina.
But Dean Swindle, Novant's chief financial officer, said the 1999 figures were the result of systems conversions and Y2K concerns. Novant also lost about $100,000 per employed physician and has about 300 employed physicians, he said.
Swindle declined to comment on the relative performance of Novant's two markets, but he said Novant had net income of $11 million in its most recent quarter ended March 31.
Nor does Novant intend to split up because of post-merger losses, he said. In Charlotte, Presbyterian has at least 37% of the market, he said.
"That's a very good position to be in, and we feel we have room for improvement," he said. "We see the future as bright."