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September 18, 2015 01:00 AM

Geisinger's net patient revenue rises, operating margin up slightly

Michael Sandler
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    After a strong increase in net patient revenue, Geisinger Health System reported an operating margin of 3.5% for fiscal 2015, a slight uptick compared with 3.4% last year.

    For the year ended June 30, the Danville, Pa.-based system reported an operating surplus of $159.8 million on revenue of $4.6 billion. That compares to an operating surplus of $136.8 million on revenue of nearly $4 billion for fiscal 2014.

    Net patient service revenue was up 22.5%, but Geisinger did not break out patient volume figures in its financial report.

    Overall, premium revenue grew 7.8% in 2015. However, it made up 48.1% of total revenue in 2015, which was down from 51.2% of total revenue last year.

    At 19.4%, Medicare Advantage accounted for the largest chunk of premium revenue. Geisinger's total revenue and expenses grew at an equal pace, with both increasing 14.7%.

    Salaries and benefits, contracted services and supplies all rose in fiscal 2015.

    And those costs will continue to rise.

    As of Sept. 6, Geisinger raised its minimum wage to $10 an hour. The estimated annual cost for that pay increase is $3.3 million, according to the system.

    While total revenue was up, the system's investments took a hit, and gains from investing and financing activities dropped 87.9% from last year. Geisinger lost $170.1 million in net unrealized investment earnings in fiscal 2015.

    The cost of charity care was approximately $44.2 million in fiscal 2015, up from $36 million in 2014.

    This year, Geisinger expanded beyond Pennsylvania.

    Earlier this month, a New Jersey judge approved the system's May 2014 agreement to absorb Atlantic City, N.J.-based AtlantiCare Health System, an acute-care focused, integrated healthcare delivery system. AtlantiCare's total revenue in 2014 was $805 million.

    The system also announced a deal with Holy Spirit Health System in Harrisburg, Pa., which reported $364.1 million in fiscal 2014 revenue. No money exchanged hands in either transaction.

    Last year, Geisinger closed on a $46.5 million deal to acquire PrimeMed, a multispecialty medical group with operations in the greater Scranton, Pa., area.

    Geisinger also underwent a leadership change, as Dr. David Feinberg replaced Glenn Steele Jr. as CEO in May.

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          • - Top 25 Women Leaders
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      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
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        • - Value Based Care
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        • - Future of Staffing
        • - Hospital of the Future (Fall)
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