The absence of an impairment loss in 2014 helped Phoebe Putney Health System nearly quadruple its total surplus during the year, despite declining revenue and no cut to its total expenses.
The Albany, Ga.-based system reported (PDF) a total surplus of $10.1 million for the year ended July 31, compared with $2.6 million in the year-ago period. The 285% improvement came in spite of a significantly larger operating loss. Phoebe Putney reported an operating loss of $30.6 million for 2014, up from $6.2 million in 2013.
The change in overall expenses was nearly flat—a drop in salaries offset a big hike in employee health and welfare expenses—but falling patient revenue impacted the not-for-profit's bottom line. Patient service revenue, net of the provision for bad debts, fell from $634.5 million in 2013 to $607.7 million in 2014.
The system had to account for a $43.9 million loss on impairment of goodwill in 2013 related to Phoebe Putney's purchase that year of Palmyra Park Hospital and medical practices.
The system cited regulatory changes and an increase in the uninsured population as reasons for recognizing the impairment loss. “The corporation determined that the carrying amount of the net assets related to the Hospital formerly known as Palmyra exceeded their fair value,” management reported.
Phoebe Putney has been under intense scrutiny since its purchase of Palmyra, now known as Phoebe North Campus in Albany. The Federal Trade Commission has challenged the $200 million acquisition of Palmyra from HCA on grounds that it created an illegal monopoly. Last year, the FTC accepted a proposed consent agreement to allow Phoebe Putney to keep the acquired hospital, but then in September of this year, the FTC withdrew its agreement and said it will resume its attempt to unwind the deal.
The initial hearing for the case, to be held in an administrative court, is scheduled for Feb. 4.
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