Cincinnati-based Mercy Health, formerly named Catholic Health Partners, reported positive operating results, but its total surplus was down significantly because of losses on interest-rate swaps.
Mercy's surplus was down 62% to $130.1 million in fiscal 2014 compared with the the surplus reported in 2013. The company blamed interest rate fluctuations for a $39.2 million loss on interest-rate swap agreements. Other investment expenses and philanthropy-related deficits contributed another $33.2 million in losses.
Operating results, however, improved during the year. Mercy reported a $131.4 million operating surplus on $4.5 billion in revenue for fiscal 2014, compared with a $127.3 million surplus on $3.9 billion in revenue the year before. The year-over-year comparison of revenue is somewhat skewed by the acquisition of its insurance arm, known as HealthSpan Integrated Care, in the fourth quarter of 2013.
HealthSpan would have contributed $484,396 of operating revenue and a $35,539 surplus if it were acquired at the beginning of fiscal year 2013, according to unaudited pro forma results included in the report. The health plan had 83,000 covered members at the end of 2014.
As was the case in 2013, Mercy's inpatient revenues increased in part because of a rise in patient acuity. Admissions and observation stays remained relatively stable. Emergency room visits were up 3.9% over 2013, and physician visits increased about 18% due to added doctors and improved productivity.