Medicaid expansion and an influx of patients have boosted the operating margin of OhioHealth, an 11-hospital system based in the competitive Columbus market.
OhioHealth plans to build off those financial gains by making new investments. The system will issue more than $280 million of debt early next month. The money will be spent on past and future capital projects, including a new neuroscience center that is expected to open this summer.
Republican Ohio Gov. John Kasich was one of the few conservative governors to buck the party line and expand Medicaid eligibility under the Affordable Care Act to residents making up to 138% of the federal poverty level. OhioHealth said in its third-quarter bondholder documents (PDF) that the state's decision has reduced the number of uninsured patients walking into its facilities. Since Ohio expanded Medicaid in January 2014, the number of self-pay patients using the health system has gone down almost 50%.
OhioHealth is not the only major health system in the state that has attributed improved finances to Medicaid expansion. The Cleveland Clinic, ProMedica Health System in Toledo and others have recorded similarly sharp declines in their number of uninsured patients.
Hospitals have fought aggressively to expand the program for the poor. Even though Medicaid reimbursements are among the lowest of all payers, from the provider perspective, it's still better than writing off an uninsured patient's bill as bad debt.
Revenue at OhioHealth jumped 22% to $2.46 billion in the first nine months of its fiscal year, which ended March 31. The system's fiscal year starts July 1. Income from day-to-day operations went up 45% to $212 million, equaling an 8.6% margin.
Beyond Medicaid expansion and higher admissions, OhioHealth has benefited from cost-cutting measures and better labor management. Grant Medical Center in Columbus, OhioHealth's second-largest hospital by revenue, also won back $3.2 million from a Medicare recovery audit contractor settlement.
OhioHealth's total surplus deteriorated 60%, year over year, to $222.7 million in the nine-month period. Most of the decline resulted from one-time gains made last year after acquiring two hospitals. But the system also recorded lower investment returns, a common theme seen at a majority of other not-for-profit health systems.
OhioHealth's primary competitors in Columbus are the Ohio State University Wexner Medical Center and Mount Carmel Health System, an integrated delivery system that is part of Trinity Health. OhioHealth has the highest market share in the area; more than 45% of inpatient and outpatient services are provided at OhioHealth facilities.