Carolinas HealthCare System more than doubled its operating surplus for the first nine months of the year as it increased its market share, saw an improved payer mix and slowed the growth of labor costs.
The 22-hospital, Charlotte-based group reported an operating surplus of $145.7 million (PDF) on $3.6 billion in revenue for the period, compared with an operating surplus of $60.4 million on $3.4 billion in revenue during the first nine months of 2013.
Carolinas said it experienced a 1.5% market share growth in its core tertiary and quaternary care business, with inpatient volume increasing 3%. It also added new providers to its medical group, which saw a 4% increase in patients. However, overall patient discharges, when adjusted for outpatient activity, were flat year over year.
The system also saw higher rates from its commercial payers, though it described the increases as lower than in years past. Medicare payment cuts under sequestration and lower Medicaid rates for outpatient care cut into some of the revenue gains.
Although the system is not located in a state that has expanded Medicaid eligibility, its unreimbursed charges decreased to 9.8% of total patient revenue from 9.9% in the prior-year period. Carolinas attributed the decrease to moving some of its previously uninsured patients into its Coventry Carelink Health Plan.
It also saw $22 million in growth among its retail pharmacies, which was one of the factors that helped boost non-patient care revenue by 6%. In addition, it booked a $10 million gain from the initial public offering of Premier.
On the expense side, Carolinas said its labor costs increased by only 3% because of changes in its health insurance plan that drove down utilization. Most of its salary increases came from adding new providers to its medical group.
The system this year also cut 100 executive and management jobs, most of them vacant at the time, and has made other changes to keep labor costs from rising alongside patient volume. However, the same could not be said for its supply costs, which jumped 7%, with nearly 44% of the increase coming from pharmaceutical costs.
Carolinas also spent $3 million in the nine-month period fighting for a Certificate of Need to build a hospital in Fort Mill, S.C. The CON initially had been granted to Tenet Healthcare Corp.'s Piedmont Medical Center in Rock Hill, S.C., but was given to Carolinas after that decision was contested.
However, in April, a judge handed the CON back to Piedmont.
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