SSM Health Care, a Catholic not-for-profit system based in St. Louis, closed out the first three quarters of its fiscal year with an operating surplus more than 10 times larger than it saw a year ago.
The 16-hospital system reported an operating surplus of $145.8 million (PDF) for the nine months ended Sept. 30, up from $14.3 million last year. That greater than 900% increase was largely the result of a system-wide initiative to cut costs and improve its revenue cycle, SSM management said.
Two recent acquisitions also bolstered SSM's scale and surplus. In April 2013, the system added Audrain Medical Center in Mexico, Mo. And in September 2013, SSM expanded further with the addition of Dean Health System, headquartered in Madison, Wis., a large multispecialty physician group, health plan and pharmacy benefit-management company.
The two acquisitions helped boost net patient revenue 5.4% to $2.5 billion for the nine-month period. Total revenue soared 36.0% to $3.6 billion, from $2.7 billion a year ago, as admissions for acute patient services remained nearly flat, while outpatient and emergency department visits increased.
Overall expenses rose for the period, up 31.3% to $3.5 billion from $2.7 billion. But total revenue outpaced cost increases associated with salaries and benefits, supplies, professional fees, interest and depreciation and amortization.
Yet while the system's operations showed improvement, its investments haven't fared as well during the first three quarters of 2014. Investment returns fell 58.5% from $87.9 million to $36.5 million. And although the system reported a year ago that a change in the value of its interest rate swaps exceeded $45.4 million, this time around, SSM reported a negative mark-to-mark adjustment of $23.9 million.
But even with those declines hitting the system's bottom line, SSM ended September and the first nine months of 2014 with a net surplus of $158.3 million, representing a 7.3% improvement over the same period a year ago.
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