CHI acquisitions boost system income

Catholic Health Initiatives reported significantly higher income over the past six months of 2013 as the result of several large acquisitions, despite operating performance declines across several of its regions

The not-for-profit Denver-based system, which provides healthcare services in 18 states, assumed control of several hospitals and a health system and purchased a majority interest in a physician-owned health plan last year. Those acquisitions helped boost CHI's income as of Dec. 31, 2013. In particular, Harrison Medical Center in Bremerton, Wash., which CHI's affiliate Franciscan Health System acquired last August, contributed $451.8 million in operating revenues for the final five months of 2013.

For the six months ended Dec. 31, 2013, CHI reported consolidated income from operations before restructuring, impairment and other losses of $161.6 million, compared with income of $5.6 million a year ago. Excluding the effect of its new acquisitions, however, CHI would have reported a loss of $112.3 million from operations before restructuring, impairment and other losses.

Though some CHI regions, including Nebraska and Colorado, saw improvements in their fiscal performance, others took hits that cut into the organization's bottom line. Both Kentucky and the Pacific Northwest reported operations losses. Health system management blamed decreasing utilization, physician retention issues, shifts in payer mix and challenges with system conversions for Kentucky's unfavorable results. And in the Pacific Northwest, the implementation of new clinical and billing systems led to a short-term drop in revenue and a simultaneous short-term increase in labor and purchased-services costs, management said.

Plans to address the recent shortfalls include “focused clinical and operational initiatives across the enterprise, targeted growth initiatives across the markets, revenue cycle improvement initiatives … (and) a comprehensive cost reduction strategy,” CHI management wrote. Other acquisitions and affiliations, announced in the last three months, are also in the works.

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