Sutter Health brought its operations out of the red in 2014, thanks to rising patient revenue and a significant decrease in its provision for bad debts.
The Sacramento, Calif., system reported a $419 million operating surplus on $10.2 billion of revenue in the year ended Dec. 31, 2014, compared with a $22 million operating deficiency on $9.6 billion in revenue the prior year. Revenue was up 5%, in part because the system cut its provision for bad debts by more than half.
Sutter set aside $410 million in 2013 for bad debts, but only $189 million in 2014. Some hospitals have reported that their bad debts and charity-care needs are diminishing because of Medicaid expansion and lower rates of the uninsured as a result of the Affordable Care Act.
Stable operating expenses, which rose by less than a percent, also contributed to improved financial results. Costs for insurance, purchased services and other areas all declined.
Sutter's total surplus was $402 million, up 34% from $300 million in 2013. Its 2014 operating margin was 4.1%, compared with -0.2% the year before.
Inpatient admissions were down 3.8% across the 19 facilities for which Sutter provides utilization data, and patient days were down 4.4%, compared with 2013. Emergency visits were up 2.1%.