Trinity Health is continuing to see benefits from growing patient volume and its recent acquisitions, but the system's expenses are growing just as fast as it reinvests in its operations.
The Livonia, Mich.-based system has set a number of ambitious goals as it moves toward a delivery model that emphasizes population health. It also is making additions and divestitures to its portfolio of hospitals and continuing to integrate its 2013 merger with Catholic Health East that made it one of the country's largest not-for-profit systems.
In a financial report for the nine-month period ended March 31, Trinity Health detailed that most of its revenue growth came from seeing more patients. Discharges increased 2.4% while outpatient visits were up 5.4% and emergency room visits, 6.6%. Seventeen of its 19 regions, or health ministries, experienced a volume increase.
Those numbers contributed to an operating surplus of $290.1 million on $10.7 billion in revenue for the nine-month period compared with an operating surplus of $270.2 million on $10 billion in revenue for the prior-year period.
The system also saw a decrease in its provision for bad debt, which it attributed in part to Medicaid expansion in certain states.
It also booked higher premium revenue from capitated contracts, which increased 18.2% to $591.6 million. Another $21.5 million in income came from its 2014 purchase of a controlling stake in the Siouxland Surgery Center in Dakota Dukes, S.D.
Trinity Health maintained its 2.7% operating margin year over year as its expenses grew nearly as fast as revenue. As volume increased, so did labor costs. Supply costs increased by $108.4 million.
It also spent $30.2 million to invest in the infrastructure it will need to analyze data, build clinically integrated networks and develop its population health expertise. Those costs included purchased services and labor, according to its earnings report.
However, the system said it is cutting costs where it can and trying to increase staff productivity as measured by paid hours per case.
Trinity also made two more divestitures during its most recent fiscal quarter. On Feb. 1, it sold its operations in Cadillac and Grayling, Mich., to Munson Healthcare. And later that month, it forged a deal to sell Mercy Suburban Hospital and East Norriton Physician Services to Prime Healthcare Services.