That greatly decreased the 15-hospital system's expenses and led to an operating surplus of $176.7 million in the quarter ended June 30—almost three times as much as the $67.3 million operating surplus in the same quarter in fiscal 2013, according to IU Health's unaudited financials.
Including investment income, IU Health's total surplus in this year's second quarter totaled $198.6 million, four times as much as in the year-ago period. Total operating revenue increased 6.2% to $1.38 billion, which gave IU Health a well-above-average 12.8% operating margin in the second quarter compared with 5.2% in the comparable quarter in 2013.
Much of IU Health's revenue improvement came from its health plan division. IU Health Plans, a Medicare Advantage organization, recorded a 72% increase in premium revenue, totaling $64.9 million in the quarter.
Comparatively, net patient-service revenue increased only 4.4% as volumes continued to be sluggish across the system. In the most recent three-month period, admissions dropped 3.9%. Total surgeries and emergency-room visits fell 8.4% and 0.7%, respectively. In the first half of IU Health's fiscal 2014, admissions were down 6.9%, surgeries dropped 8.2% and ER visits declined 5.6%.
“Management believes the declines in inpatient volumes and revenue are a reflection of the current industrywide trends in which healthcare systems across the nation are experiencing declining utilization,” officials wrote in the document.
IU Health's operating surplus in the first six months of its fiscal year equaled $386.6 million, double the amount from the first half of 2013. The total surplus reached $432.4 million, up 92% from a year ago. IU Health's revenue in the first half of fiscal 2014 increased 6.3% to more than $2.82 billion.
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