Scripps Health, a four-hospital San Diego-based system, ended fiscal 2014 with a drop in its operating surplus as it booked significantly less revenue than in the prior year even as it held expenses in check. However, like many systems, it benefitted from higher investment income.
The system had an operating margin of 6% for the year, which ended Sept. 30, compared with 7.3% for fiscal 2013.
Scripps did not disclose its patient numbers in an earnings report filed for bondholders (PDF), but its revenue declined 2.8% even before accounting for the loss of revenue from the California provider fee program.
All California healthcare providers have struggled with the loss of funds from the state program, which is designed to help hospitals that treat a large number of indigent patients. California approved an extension for the program, but implementation has been delayed while it awaits CMS approval.
For Scripps, the loss of provider-fee revenue dragged down its overall net patient service revenue for the year by a total of 6.2%.
The system, however, held its expenses in check and more than doubled its investment income to make up for some of the shortfall.
Its net surplus was $291.6 million on nearly $2.6 billion in revenue for fiscal 2014 compared with $370.8 million on $2.6 billion in revenue the previous year.
The system also received a boost from Medicaid expansion in the state. Revenue from self-pay patients accounted for 5.5% of the total compared with 6.9% in fiscal 2013. Government payers, on the other hand, accounted for a much greater share of revenue.
Its allowance for doubtful accounts also decreased to 20% of self-pay accounts receivable compared with 23% in the previous year. At the same time, it saw a small decline in write-offs.
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