Orlando (Fla.) Health continued to improve its operating margin in its fiscal first quarter with higher admissions and an improved payer mix.
A challenging fiscal 2013 had led the three-hospital system to hire Kaufman Hall to evaluate partnership options. But a turnaround the following year prompted it to end the review with a decision to retain its independence.
The system this month named a new CEO, David Strong, currently president of Rex Healthcare, Raleigh, N.C. He will start at Orlando in April.
In its fiscal first quarter of 2015, which ended Dec. 31, Orlando Health reported an operating surplus of $48 million on revenue of $553.6 million. That compares to an operating surplus of $30.9 million on revenue of $519.1 million in the prior-year period.
Its operating margin improved to 8.7% for the quarter compared with 5.6% in the comparable period.
The improvement resulted from higher patient volume, better rates from managed-care plans, a better payer mix and higher acuity patients, the system said. Its combined admissions and observation visits increased 3.4%, though outpatient visits fell 1.7%.
Self-pay patients dropped to 7.8% of patient revenue from 9.1% during the first quarter of fiscal 2014.
Orlando Health also managed to hold expense growth to just 3.5%. However, it said the comparable period included $7.5 million in severance and consulting costs related to its turnaround efforts. Without those additional costs, its expenses actually increased 5%, mostly due to higher salaries and increased supply and drug costs.
With its future looking financially brighter, Orlando Health also is focusing on growth. In November, it forged a joint venture agreement with an undisclosed party to purchase five imaging centers. The system contributed $1.5 million for a 51% stake in the venture.
In addition, its board in November also approved an investment of $4.5 million to build an $18.3 million patient tower at Health Central in Ocoee, Fla., which Orlando Health purchased in 2012 from the West Orange Healthcare District. The remainder of the funds will come from the district, which also is providing a $25 million grant to fund an emergency department expansion at Health Central.
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