Sisters of Charity of Leavenworth Health System's hospitals were busier in the first three months of the year, as it became one of the latest systems to report growth in hospital demand as insurance expansion under the Affordable Care Act takes hold.
The Denver-based system, which is expected to relocate this month to Broomfield, Colo., joins Dignity Health, Trinity Health and other multistate systems that report an influx of patients to hospitals, reversing a trend of flat and declining inpatient use that began with the Great Recession. That growth—which is also apparent in one rating agency's early financial results for fiscal 2014—will be closely watched by economists and policymakers on the lookout for a rebound in U.S. health spending. Moody's Investors Service said last month that not-for-profit hospitals' revenue growth accelerated with an improved economy and more insured patients.
Sisters of Charity of Leavenworth reported 6.5% more patients were admitted to its nine hospitals during the first three months of 2015 compared with the same period a year ago. Surgery inside and outside the hospital also increased. Ambulatory volume declined 1%. The system owns eight hospitals and manages one in Colorado, Kansas and Montana.
That helped to boost operating revenue by 8.5% to $626.2 million during the three months compared with the same window the prior year. Also contributing to the revenue growth was fewer uninsured patients.
In the year before the expansion of subsidized insurance under the Affordable Care Act, Medicaid made up 10% of the system's revenue and the uninsured another 6%. For the three months that ended in March, Medicaid accounted for 15% of the system's revenue and the uninsured about 3%. That's compared with the first three months of 2014, when Medicaid and the uninsured accounted for 12% and 5% of revenue, respectively.
Not all of the system's hospitals operate in states that embraced expansion. Colorado expanded Medicaid. Kansas did not. Montana's expansion is pending a waiver approval.
A Modern Healthcare analysis of not-for-profit hospitals' 2013 and 2014 finances shows revenue and operating margins grew faster among those in Medicaid expansion states.
The Sisters of Charity of Leavenworth's operating margin for three months ended in March was 2.6%, an increase from the 1.1% for the first quarter of 2014. Operating income totaled $16.1 million for the first three months of the year, up from $6.2 million during the same period the year before.
That margin was aided by expenses that grew more slowly than revenue. Operating expenses totaled $610.1 million, an increase of 6.8% from the same three months the prior year. That's in part thanks to a decline in supply costs.