New ER facility helps Shands see boost in revenue, patients

Shands Teaching Hospital and Clinics, an affiliate of the University of Florida, booked higher revenue from treating more patients during the first nine months of its fiscal year, but rising expenses resulted in a smaller surplus.

In an earnings report for the nine-month period (PDF) ended March 31, Gainesville-based Shands said its acute-care, psychiatric and rehabilitation hospitals admitted 7.3% more patients than during the same period last year.

Outpatient volume at the facilities also increased 4.1%, while emergency and trauma visits increased 19.8%. The system attributed about two-thirds of the increase in ER visits to the construction of an off-site, full-service emergency department in the northwest section of Gainesville. The $4.6 million project brought in more than 8,000 visits since opening last August.

Net patient service revenue increased 5.4% as not only volume but also patient acuity increased. While the system saw higher reimbursement from commercial insurers, some of those gains were offset by other factors, including an increase in observation stays.

On the Medicaid side, Florida last July changed its payment methodology so that hospitals are now reimbursed on a “per case” basis rather than “per diem,” resulting in payments that are about 11% lower, Shands said.

Outside of patient care, the system booked about $2.4 million in revenue from meeting additional “meaningful use” benchmarks for its electronic medical records system, as well as $1.5 million from an agreement to provide pharmacy services to outside pharmacies.

In addition, Shands has a 40% interest in a joint venture with Community Health Systems to operate three rural hospitals as well as an equal partnership with Solantic, an urgent care operator, in a walk-in clinic in Gainesville.

Yet even as its net position improved, the system's expenses grew 8.2%, mostly owing to higher salary, benefit and supply costs as its employee headcount and patient load increased.

As a result, its surplus for the nine-month period declined to $77.2 million on revenue of $894.2 million, compared with $87.3 million on revenue of $846.2 million in the previous fiscal year.

Located in a state that did not expand Medicaid, Shands did not report any impact from healthcare reform, and its provision for bad debt increased 25.2% year-over-year.

Follow Beth Kutscher on Twitter: @MHbkutscher