Scripps Health, a four-hospital system in San Diego, has improved its financial picture with higher patient volume and the return of a California program that provides additional funds to hospitals treating low-income patients.
Its second-quarter earnings report, for the period ended March 31, reflects the continuation of an improvement that started in its first fiscal quarter. The system received a ratings upgrade in April from Fitch Ratings for its strong financial performance, moving up one notch to AA from AA-.
More than half of Scripps' revenue growth in the quarter came from the state's provider fee program, which had been on hold for most of last year while waiting for the CMS to approve its extension. The program levies a fee on hospitals that is then matched with federal funds and returned to providers in the form of higher Medi-Cal payment rates.
The rest of the increase came from seeing a greater number of emergency room patients, trauma cases and outpatient visits. The report did not break out statistics on the size of the increase.
In total, Scripps reported an operating surplus of $36.6 million on $649 million in operating revenue for the second quarter compared with an operating surplus of $32 million on $600.2 million in revenue in the prior-year period.
Its operating margin improved to 5.6% from 5.3%.
Scripps operates in a competitive market, making its growth even more impressive, Fitch said in its ratings upgrade. The system has benefited, for instance, from an agreement with Kaiser Permanente to provide cardiac services to Kaiser members.
Scripps also is in expansion mode. It recently completed its $404 million Prebys Cardiovascular Institute, which will combine the cardiac programs from its La Jolla and Green hospitals.
The system's capital spending plan totals $1.7 billion through 2020, in part to replace its electronic medical-record system. Other projects include a new emergency department at Scripps Memorial Hospital La Jolla as well as a medical office building attached to Prebys.
Scripps also spent $33 million in April to acquire Imaging Healthcare Specialists, a provider of outpatient imaging services at eight locations in San Diego and Riverside counties.