Methodist Health System is seeing higher patient volume in its competitive Dallas market, which boosted financial returns in its fiscal third quarter.
The four-hospital system particularly benefited from higher outpatient volume, which increased 6.6% year over year. Emergency room visits also increased 7.3% while inpatient volume was up 0.9%.
For the period ended June 30, Methodist reported an operating margin of 12.3% compared with 7.1% in the same period in 2014.
It also attributed the improvement to lower bad debt and charity care, which decreased $15 million, and increased payments from Texas' Medicaid waiver program. Methodist received $15.3 million from the program, which provides additional funding to hospitals for providing uncompensated care as well as through incentive payments for developing strategies that aim to provide better care at a lower cost. The latter initiative is known as delivery system reform incentive payments, or DSRIP.
The future of the DSRIP program could be in doubt, however, as the Obama administration wants to restrict funding for the initiative only to states that have expanded eligibility for Medicaid. The program could expire in September 2016 if Texas officials can't reach a compromise with the CMS. Texas receives $4 billion a year through its waiver program.
At Methodist, the 17.4% increase in operating revenue exceeded the 10.7% increase in expenses that came with the higher volume and an additional $4 million in community benefit expense related to the waiver program.
Methodist also saw higher depreciation expense after opening a new care tower in Dallas.
For the quarter, Methodist reported a $40.2 million operating surplus on $326.6 million in revenue compared with a $19.7 million operating surplus on $278.2 million in revenue in the prior-year period.