Management pointed to “acquisitions and investments in strategies to position the organization for healthcare reform and changing payment methods” as the drivers behind the growth in expenses, but said that an initiative to cut $100 million in expenses is underway.
Simultaneously, revenue was constrained, management explained, as patient volumes shifted from inpatient to outpatient settings. Inpatient admissions and inpatient surgeries dropped 3.4% and 5.9%, respectively, for the period, while outpatient hospital admissions and outpatient surgeries rose 4.3% and 1.6%, respectively. Reductions in government payments as a result of CMS’ “two-midnight” rule also negatively impacted the system’s revenue, Allina Health reported.
Meanwhile, returns overall from non-operating activities also fell for the period. Though returns on investments more than doubled, Allina Health reported a $21.9 million loss on interest rate swap agreements used to manage fluctuations in rates and the overall cost of the system’s debt.
Allina Health’s six-month overall surplus fell to $63.2 million, a 45.6% decline from $116.1 million in the year-ago period, according to its quarterly financial statement filed Wednesday.
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