Higher expenses gnaw at New York-Presbyterian's margin

New York-Presbyterian Hospital in Manhattan posted stable surpluses (PDF) in the first half of 2014, but increased expenses chipped away at the academic medical center's margin.

New York-Presbyterian's operating surplus fell 14.7%, totaling $100.2 million in the first half of 2014. Salaries, wages, employee benefits and supplies all went up from last year. Expenses overall climbed 5.3% year-over-year.

New York-Presbyterian's revenue, meanwhile, increased at a slower pace—4.2% in the first six months—reaching $2.17 billion. Volumes were up in several core areas, including total inpatient discharges (7.6%), ambulatory surgeries (9.4%) and total outpatient visits (3%).

The 2,262-bed, multicampus hospital primarily treats commercially insured patients. Almost 52% of its net patient-service revenue in the first half of this year came from private payers. Only 0.6% of New York-Presbyterian's revenue came from self-pay or uninsured patients.

Rising expenses led to a decrease in the hospital's operating margin, which fell to 4.6% in the half-year period this year, compared with a 5.6% margin in the same period of 2013. New York-Presbyterian did post major investment gains, which helped to stabilize the hospital's overall surplus. Including investment income, the six-month overall surplus totaled $175.2 million, a 7.2% boost from the year-ago period.

New York-Presbyterian made headlines in the second quarter this year after a run-in with the federal government. The hospital and its affiliated Columbia University reached a settlement with HHS' Office for Civil Rights, agreeing to pay $4.8 million, after patients' protected health data was exposed online. The government said it was the largest-ever Health Insurance Portability and Accountability Act settlement.

The hospital is also in the process of losing one of its system affiliates to a competitor. Earlier this summer, Montefiore Health System in the Bronx signed a letter of intent to absorb Nyack (N.Y.) Hospital, a member of the New York-Presbyterian Healthcare System.

Follow Bob Herman on Twitter: @MHbherman