Inova Health System saw another large jump in its operating margin in 2014 thanks to a better payer mix and increased outpatient surgical volumes.
The five-hospital system based in Falls Church, Va., reported an operating surplus of $217.7 million on $2.7 billion in revenue for the year ended Dec. 31, for an operating margin of 8.1%.
In 2013, its operating surplus was $131.8 million on $2.5 billion in revenue, with a 5.2% operating margin.
The results continue an improvement that was already evident in the first half of its fiscal year.
Unlike in the first half, however, Inova said its expenses rose 3.1%, because of increases in salary and benefit costs as well as its outsourcing contracts for dietary, anesthesia and dialysis services. It also incurred costs associated with preparing for the rollout of the new ICD-10 coding system and consulting fees for its switchover to clinical and revenue-cycle management systems from Epic Systems Corp.
Admissions decreased 2.4% year over year while observation stays increased 8.9%. Emergency department visits in 2014 remained flat. Outpatient visits overall also increased less than 1%, but outpatient surgeries were up 7.8%.
The system saw a greater percentage of its patient revenue coming from commercial and managed-care contracts, 52.2% in 2014 compared with 51% the prior year. Medicaid accounted for 9.1% of the total, down from 9.8% in 2013. Self-pay patients represented 8% of revenue, down from 8.3% the previous year.
Like many systems, however, Inova's overall financial picture took a hit from shaky financial markets. Its unrestricted net assets increased by $332.2 million at year-end, compared with the $517.8 million it had left over the previous year.
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