UnityPoint Health's margin rises as system expands

The addition of new system members, as well as strong outpatient activity, helped offset lower inpatient volume during the first six months of 2014 for UnityPoint Health, helping surpluses and margins to improve.

The West Des Moines, Iowa-based not-for-profit system, which includes hospitals in Iowa, Illinois and Wisconsin, reported revenue of $1.8 billion for the six months ended June 30, a 32.4% increase over the $1.4 billion recorded in the year-ago period. The improvement came largely from the addition of several healthcare organizations since November 2013—Proctor Health Care, Peoria, Ill., and Meriter Health Services and Physicians Plus Insurance Corp., both in Madison, Wis.

But even without the new members, and in spite of inpatient discharges that dropped 6.1%, operating revenue increased 2.9%, according to management.

A long-term cost-savings initiative launched in 2012 helped control variable costs during the period, with management estimating $18.6 million in cost reductions during the six months. By the end of the year, cost reductions are expected to be about $47.1 million. Overall though, expenses still rose 32.3%, nearly keeping pace with the increase in revenue.

But rising expenses weren’t enough to strip away a 40% boost to UnityPoint Health’s operating surplus. The system reported an operating surplus of $30.8 million across the two quarters, up from $22 million last year, or an operating margin of 1.7%, up from 1.6%.

But the system’s overall margin soared, thanks to a $437.2 million contribution received in UnityPoint Health’s January affiliation with Meriter. Growth in investment income also boosted the bottom line, even as losses on interest rate swap agreements and debt issuances had a negative impact. For the first six months of 2014, UnityPoint Health’s overall surplus was $528.3 million, equaling a margin of 29.4% and representing a 432% improvement on the $99.3 million surplus reported in June 2013.

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