Additional revenue from the California provider fee program helped San Francisco-based Dignity Health report a more than 300% increase in its operating surplus for its fiscal second quarter.
The system also said higher volume, a shift from self-pay to Medicaid coverage and better reimbursement rates from insurers contributed to its higher surplus. Without the impact of the provider fee payments, revenue nevertheless increased 10.7% (PDF) in the second quarter compared with the prior-year period.
The CMS in December approved an extension to the state's provider fee program, which provides supplemental payments, matched by federal funds, to hospitals that treat Medi-Cal patients. The program had been on hold for most of 2014 while approval was pending. The loss of funds prior to that approval had significantly impacted California's hospitals.
The 37-hospital Dignity received $420 million from the program, which covered the period from January through December.
Dignity admissions increased 3.2% while admissions adjusted for outpatient activity were up 3.9%.
For the second quarter ended Dec. 31, Dignity reported an operating surplus of $377.9 million on $3.7 billion in revenue compared with the prior-year period's operating surplus of $91.8 million on $2.7 billion in revenue.
Its operating margin increased to 10.2% in the period from 3.4% in the second quarter of 2013.
All three of Dignity's states—Arizona, California and Nevada—expanded Medicaid eligibility for low-income adults and the system said its provision for uncollectible accounts decreased to 1.5% of revenue, down from 2.6% in the second quarter of 2013.
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