Not-for-profit Banner Health reported a 16.7% increase in its operating surplus during the nine months ended Sept. 30, a gain that comes thanks to strong patient-service revenue from a jump in emergency room visits.
The Phoenix-based system realized a $228.8 million operating surplus on $4 billion in revenue, as compared with a $196.1 million operating surplus on $3.8 billion in revenue for the same nine-month period in 2013, according to unaudited third-quarter financial results. That translates into a 5.7% operating margin, just slightly higher than the 5.2% margin from the same period last year.
However, Banner saw a notable drop in its total surplus, at $242.4 million, down by 55.3% as compared with $542.7 million during the same period the year before. A major swing in swaps income, from a $142.1 million gain in the first nine months of the previous year to a $79.5 million unrealized loss on interest rate swaps in this fiscal year was to blame.
Expenses hit $3.8 billion, up 4.7% from $3.6 billion during the same period last year. Salaries and benefits were up 7.6%, supplies up 7.2% and depreciation and amortization, up 9%. The company experienced similar difficulties last quarter.
Banner saw a sizable increase in ER visits, with 623,251 visits to Banner ERs during the nine-month period ending Sept. 30, up 13.9% from 547,263 visits during the same time in 2013. Non-ER outpatient activity increased slightly by 1.7%, while patient days increased by less than 1%. At 4,544 hospital beds, the system has about 300 more beds than it did in 2013, likely due to its acquisition of Casa Grande Regional Medical Center in February.
Notably, the company provisioned 25% less for doubtful accounts during the nine-month period. With more Americans insured through Obamacare exchanges, Banner may be more confident that patients will be better able to pay their medical bills.
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