Presbyterian Healthcare Services reported strong growth in its health plan operations in the second quarter of 2015, building on the benefit it has seen since winning a Medicaid managed-care contract two years ago.
The Albuquerque-based integrated delivery system said a 13.3% increase in net premium revenue drove much of its financial improvement. Its operating margin increased to 8.8% in the second quarter, up from 6.5% during the same period last year.
Presbyterian was one of four health plans selected in 2013 to manage medical, long-term care and behavioral health services under New Mexico's revamped Centennial Care program. The program expanded and replaced the state's previous Medicaid program, known as SALUD!
Over the past year, Presbyterian's Centennial Care membership has increased 13.7% and, as of June 30, has covered 205,553 people. The growth in Medicaid membership also led to a 42.8% decrease in its provision for bad debt as previously uninsured patients gained healthcare coverage.
In its hospital operations, Presbyterian saw an 8.8% increase in net patient service revenue as it benefited from lower bad debt and a 7% increase in outpatient and emergency room visits. The system opened two new outpatient clinics during the fourth quarter.
Outpatient activity was stronger in its Albuquerque and Rio Rancho markets than its smaller regional markets, which Presbyterian attributed to the challenge of recruiting and retaining physicians.
The revenue growth came despite a 3.3% decrease in inpatient volume and a 1.7% decrease in patient days.
Presbyterian's expenses included a 22.7% increase in medical claims and a 13.4% increase in supply costs, namely for drugs that treat hepatitis C and pneumonia. The system said it has opened a specialty pharmacy to dispense cancer drugs.
For the second quarter, Presbyterian reported a $64.4 million operating surplus on $731 million in revenue compared with the year-ago period's $42.7 million operating surplus on $658.3 million in revenue.
The system in May issued $237.2 million in bonds to refinance older debt and fund new projects. Presbyterian will direct $118 million of the proceeds to various capital needs, including a new patient tower at Rust Medical Center in Rio Rancho, new medical clinics and the remodeling of patient towers at Presbyterian Hospital in downtown Albuquerque.