McLaren sees higher 9-month utilization, rising investment income

Increased utilization during the first nine months of McLaren Health Care Corp.'s fiscal 2014 helped the Flint, Mich.-based system report higher revenue for the period, but it was unrealized investment gains that improved the organization's bottom line.

Utilization statistics were up in all categories, with the system experiencing a higher number of discharges, patient days, emergency room visits and outpatient visits. Some of that is certainly due to McLaren's acquisitions during the three quarters, including the addition of both the Barbara Ann Karmanos Cancer Institute in Detroit and Port Huron (Mich.) Hospital.

As a result, the 12-hospital not-for-profit system reported revenue of $2.1 billion for the nine months ended June 30, 2014, up 12.5% from $1.8 billion a year ago. And even though patient-service revenue was higher, the system's provision for bad debts dropped.

But rising expenses, particularly supply costs that climbed 12.9%, stripped away any improvement, leaving operating income down slightly. McLaren reported $39.7 million in operating income for the period, down 2.9% from $40.9 million at the same point last year.

Investment income between the periods stayed flat, but unrealized gains on investments increased 52.1%, causing McLaren's surplus at the end of the reporting period to be $134.1 million, up from $119.8 million in June 2013.

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