Virtua Health, the South Jersey system that recently converted one of its underperforming hospitals to an outpatient facility, reported lower patient revenue but stable operating results in its latest earnings report.
The Marlton, N.J.-based system ended inpatient services at one of its four hospitals in late January. The Berlin campus still offers outpatient, diagnostic, rehabilitation and long-term care services as well as a 24/7 emergency department.
Virtua has said it does not plan to lay off workers and will instead transition certain Berlin employees to other sites.
The hospital, which had 83 beds, was Virtua's smallest facility with an occupancy rate of just 29.6% in 2014. As a result, its closure meant that inpatient volume declined less than 1% in the first half of 2015 compared with the same period last year.
The system-wide occupancy percentage increased to 67.4% in the first half of 2015 from last year's 61.2%.
On the outpatient side, emergency department visits increased 1.7% during the first half of the year and other outpatient services were up 1.8%. The system had anticipated a decline in outpatient volume so the numbers were ahead of budget. Same-day surgeries, however, were down 13.1%.
Patient service revenue declined 2.4% in the second quarter but the system cut its provision for bad debt by nearly a third. Other revenue, which could include items such as unrestricted donor gifts and electronic health record incentives, also increased, which meant that its total second quarter revenue was essentially flat year over year.
Virtua also held steady its expenses. As a result, its operating margin in the second quarter was 11.1% compared with the prior-year period's 11.2%.
In total, the system reported a second quarter operating surplus of $31.3 million on $281.2 million in revenue compared with an operating surplus of $31.8 million on $282.2 million in revenue during the same period last year.
However, losses on its investments made a deep cut in its bottom line. Its net surplus in the second quarter declined to $27.5 million, compared with the year-ago period's $56.7 million.
