Froedtert Health, a Milwaukee-based system, improved its operating margin in the first quarter of its fiscal 2015 as it significantly increased its revenue on higher patient volume and acuity. But investment losses ultimately took a large bite out of its bottom line.
The three-hospital group reported a $25.5 million operating surplus on $449.5 million in revenue, for an operating margin of 5.7%. In the first quarter of its last fiscal year, it saw a $10.5 million operating surplus on $396.2 million in revenue, or an operating margin of 2.7%.
But when non-operating losses were factored in, its net surplus was $4.1 million for the quarter compared with $53.4 million for the same period in fiscal 2014.
Yet its operating metrics showed improvement. Froedtert's admissions increased 6.5% while emergency room visits were up 2.7%. Outpatient activity was nearly flat, but physician clinic visits increased 12.6%.
Self-pay patients accounted for 2.1% of revenue compared with 4.1% in the first quarter of its last fiscal year. Revenue from Medicaid patients represented 14.3% of the total after Wisconsin's modified Medicaid expansion, compared with 11.8% in the year-ago period.
Froedtert said it has focused on reducing length of stay as part of improving clinical outcomes and, to that end, saw a 4.5% decrease in its average length of stay.
However, its higher patient volume continued to drive up salary and supply costs—much like last fiscal year. Moreover, higher health and dental costs also contributed to the overall 9.9% increase in expenses in the quarter.
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