BJC HealthCare, a large St. Louis-based health system, reported a significant rise in operating income in 2014, but its total surplus declined due to losses from interest-related expenses.
The not-for-profit system reported an operating surplus of $232.5 million during the year ended Dec. 31, up 59.2% from 2013. BJC reported $4.1 billion in revenue last year, up 4.88% from 2013.
Despite a 2.8% increase in total expenses, BJC was able to increase its operating surplus by cutting labor-related costs by 1.6%. This is the first time BJC's salary and benefit expenses have dropped since at least 2009, according to filings.
A BJC spokeswoman said the system conducted a "labor force adjustment" in mid-2013 that is reflected in FY 2014, in addition to changes in staffing volumes throughout the year. BJC also saw a decrease in defined benefit pension expenses due to the increase in interest rates at the end of 2013, she said.
The reduction in costs allowed BJC to deliver a 5.7% operating margin, up from 3.7% the year prior.
BJC's total surplus was $269.6 million, down 45% from $490.5 million the year before. The decrease was the result of $70.2 million in unrealized losses on interest-rate swap contracts and another $69.7 million in unspecified, non-operating expenses.
BJC increased its provision for bad debts by 42.4% to $207.6 million, from $145.8 million the year before. The system attributes the increase to a rise in self-pay patients and lower collection rates those accounts, according to financial documents. BJC also lowered the income cap for financial assistance under its charity care policy last year. Missouri, meanwhile, has so far declined to expand it's Medicaid program under the Affordable Care Act.
The system did not report any information about its payer mix or admission statistics.
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