Rush's operating margin holds steady; revenue gains slightly outpace expense increases

Rush University Medical Center's operating revenue and operating expenses grew at nearly the same rate during fiscal 2014, leaving the Chicago-based hospital system to report no change in its operating margin from the previous year.

Rush reported a fiscal 2014 operating margin of 4.2%, the same as in 2013, after operating revenue went up 7.2% and operating expenses rose 7.1%. The overall change in revenue, from $1.8 billion in 2013 to $2.0 billion for the year ended June 30, 2014, was driven by slightly higher admissions, increases in outpatient and physician practice-plan revenue, and greater utilization of key service lines that include cancer care.

Meanwhile, operating expenses climbed from $1.8 billion to $1.9 billion as costs related to medical supplies and pharmaceuticals rose 9.6% and the cost of malpractice and other insurance soared 12.4%. A 15% increase in costs tied to legal services, consulting fees, and memberships and dues also offset some of the gains on the revenue side.

But the 0.1% by which revenues outpaced expenses allowed Rush to report an operating surplus of $82.5 million for the year, representing an 8.2% improvement over the $76.3 million reported in 2013.

Meanwhile, non-operating income had the biggest impact on the system's financial status, rising 43.7% to $49.9 million for the year, thanks to investment income, gains on interest rate swaps and a gain on the sale of one of its professional office buildings.

Rush, which includes an academic medical center and two community hospitals serving the Chicago metropolitan area, closed out fiscal 2014 with a surplus of $132.4 million, up 19.3% from $111.0 million last year.

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