Indiana University Health reported another quarter of strong financial results (PDF) as patient revenue rose nearly 12%, despite declining admissions across the state's largest system.
Net patient service revenue at the Indianapolis-based system climbed to $1.3 billion for the three-month period ended Sept. 30. A year ago, IU Health reported patient revenue of $1.2 billion. Health system officials attributed the jump to increased physician office visits, improved collection efforts and a shift from self-pay to government payers. Those factors helped offset a 2.3% drop in admissions, which management called “a reflection of the current industrywide trends in which healthcare systems across the nation are experiencing declining utilization.”
Meanwhile, total surgeries rose 7.8% and emergency-room visits were up 4.4% for the most recently ended quarter.
IU Health also benefitted from a relatively small hike in expenses for the three-month period. Much of that overall 2.2% increase came from a hospital assessment fee that soared to $29.7 million from $702,000 a year ago.
Under a program approved by the Indiana General Assembly, the Office of Medicaid Policy and Planning collects a fee from eligible hospitals that is used in part to increase reimbursement to participating hospitals for services provided in fee-for-service and managed-care programs. Year to date, IU Health's assessment fees related to the program have totaled $177.8 million, compared to $68.0 million in the first three quarters of 2013.
But overall, for the first nine months of this year, IU Health's total expenses have actually dropped slightly, thanks to the system's five-year, $1 billion cost-reduction efforts. Part of that has been linked to layoffs and early retirement for employees. As of Sept. 30, IU Health included 2,025 fewer full-time employees than it did at the same point last year, according to its unaudited financial statements.
IU Health's operating surplus for the quarter reached $197.4 million, nearly 3.5 times what it was in the third quarter of 2013. At that time, IU Health reported an operating surplus of $57.0 million.
And even as the system factored in a $33.7 million investment loss, compared with an investment gain of $57.7 million in the year-ago quarter, IU Health ended September with a significant surplus. The 15-hospital system's net surplus for the third quarter of 2014 totaled $149.6 million, up 56.5% from $95.6 million in the year-ago comparable quarter.
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