Sutter Health, Sacramento, Calif., said its profits grew fivefold in 2002, reflecting higher patient charges, lower costs and consolidated services. Operating income for the 26-hospital system climbed 420% to $265 million, a 5.4% margin, from $51 million, or a 1.3% margin, in 2001. Net income grew 187% to $284 million, and annual revenue rose 10% to $4.9 billion. Much of the improvement stemmed from the financial turnaround at Alta Bates Summit Medical Center, Oakland, Calif., which earned $4 million in 2002, compared with a loss of $55 million the year before. Not-for-profit Sutter says it needs a systemwide operating margin of about 5% in order to fund an ongoing capital improvement project of $3.5 billion, including $600 million in state-mandated seismic retrofitting. Sutter's price increases, however, may prove to be troublesome. The California Public Employees Retirement System agreed earlier this month to investigate the company at the request of the Service Employees International Union Local 250, which accused five Sutter hospitals of reaping excessive profits and overcharging patients. -- by Laura B. Benko
In turnaround, Sutter reports 5% margin in 2002
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