ProMedica Health System, a Toledo, Ohio-based group with 11 hospitals, reported an increase in its operating margin in 2014 as volume grew for inpatient and outpatient services.
The system, which ends its fiscal year Dec. 31, reported a 2014 operating surplus of $67 million (PDF) on nearly $1.5 billion in revenue. In contrast, its operating surplus in 2013 was $41 million on $1.4 billion in revenue. Its operating margin increased to 4.5% from 2.9% year over year.
Higher volume helped explain the improvement. Discharges increased 4.9% year over year while outpatient surgeries were up 10.4% and emergency room visits, 13.4%.
ProMedica also saw a benefit from Medicaid expansion. The system operates in Ohio and Michigan, both of which expanded eligibility for low-income adults. Charity care decreased to 1.5% of gross revenue in 2014, down from 2.6% in 2013. Bad debt similarly decreased to 1.3% of revenue from 1.8% year over year.
The system's health plan, Paramount, increased the number of Medicaid lives it covers by more than 50% and added 1,600 commercial lives through the insurance exchanges. However, ProMedica said its commercial business declined in Michigan even as it remained steady in Ohio.
On the expense side, ProMedica saw a 2.6% increase in costs associated with employed physicians, greater patient volume and a one-time $11.1 million payment to employees who took advantage of its early retirement incentive program.
ProMedica is still holding on to St. Luke's Hospital in Maumee, Ohio, after filing an appeal with the U.S. Supreme Court in December. The system had been ordered to divest the hospital in April after an appeals court sided with the Federal Trade Commission in deeming the 2010 acquisition anti-competitive.
A decision on whether the Supreme Court will hear the case is expected in the spring.
ProMedica also went back on the acquisition trail to buy Mercy Memorial Hospital in Monroe, Mich., in a deal that closed in January.
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