Shands Teaching Hospital and Clinics more than doubled its operating surplus in the first quarter of its fiscal 2015 as it treated more patients and received improved payment rates.
The Gainesville, Fla.-based group, part of University of Florida Health, reported an operating surplus of $35.5 million (PDF) on $317.3 million in revenue for its first quarter ended Sept. 30. During the year-ago period, it booked a surplus of $16.2 million on revenue of $290.5 million.
Shands saw a 10.6% increase in admissions and observation cases and a 2.9% increase in outpatient visits. Revenue from Blue Cross and commercial health plans represented a greater share of revenue than in the prior-year period, by nearly 2 percentage points, while revenue from self-pay patients represented 5% of the total, down from 7.9% in the first quarter of fiscal 2014.
The hospital has struggled with rising expenses. In the first fiscal quarter, its supply and service costs again increased, to the tune of 7.5%, but salary and benefit costs decreased 1.1%.
The overall slowdown in expense growth allowed it to improve its operating margin to 11.2% in the first quarter, up from 5.6% during the prior-year period.
In September, both Moody's Investors Service and Standard & Poor's downgraded Shands' credit rating one notch to A3 and A-, respectively, with a stable outlook.
The downgrades came as Shands prepared to raise about $320 million in new debt from new bond issuances to finance a cardiovascular and neuromedicine patient tower at UF Health Shands Hospital. The nine-floor, 538,000-square-foot building is expected to cost $440 million and open in the first quarter of 2018.
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