Intensive cost-cutting and a full year of integrating an acquisition helped SSM Health, a St. Louis-based Catholic health system, post a much-improved operating margin last year.
SSM's operating surplus in 2014 was $146.5 million, a reversal from the $74.3 million operating loss recorded in 2013, according to the system's latest financial statements.
In late 2013, SSM initiated a plan to save $150 million by lowering expenses and improving management of its revenue cycle. Most of those savings were realized last year.
Last year was also the first full year in which Dean Health Systems, Madison, Wis., was part of SSM. SSM completed its acquisition of Dean in September 2013. Dean includes multispecialty physician practices; Dean Health Plan, an insurance plan; and Navitus Health Solutions, a pharmacy benefit manager).
Dean Health Plan immediately helped SSM's top line growth. The system's revenue climbed 28% to $4.9 billion in 2014. Premium revenue from Dean Health Plan represented about one-quarter of that total.
However, executives said the financial turnaround went beyond the integration of Dean and will require further diligence on the expense management side. “While the Dean acquisition did help improve our financial situation, it was not the sole reason for the improvement,” spokesman Steve Van Dinter said.
SSM's total surplus increased 16% year over year to $147.4 million. Despite the better results from day-to-day operations, investment income and the value of SSM's interest-rate swaps took a hit. Investment income fell 57%; SSM also recorded a $57 million loss from swap financing in 2014 compared with a $61.5 million gain the year before.
Acute inpatient admissions were up 0.5%, while outpatient visits rose 5%.