An increase in patient volume boosted Dignity Health's operating margin in its fiscal 2015.
The San Francisco-based system also continued to benefit from the return of California's provider fee program, which supplements Medicaid payments to providers. The program had been on hold in 2014 while the state waited for the CMS to approve its extension.
Dignity's operating margin increased to 3.4% (PDF) for the year ended June 30, up from 2.7% in fiscal 2014.
However, like most health systems, Dignity grappled with volatility in the financial markets and saw lower returns on its investments. As a result, it ended the year with a lower net surplus than in the previous year.
Dignity's financial statements did not break out admissions statistics, but a news release said it saw a 4% increase in patient volume during the fiscal year. On a third-quarter earnings call, executives attributed the volume growth in both inpatient and outpatient services to coverage expansion under the Affordable Care Act as well as the system's branding campaign.
The system also saw an improvement in its payer mix, including a 28% reduction in self-pay patients. Charity care write-offs declined 17%.
In total, Dignity reported a fiscal 2015 operating surplus of $423.3 million on $12.4 billion in revenue compared with an operating surplus of $287.8 million on $10.7 billion in revenue in fiscal 2014.
After factoring in investment income, Dignity's net surplus for the year was $557.9 million compared with the prior year's $885 million.
Dignity also emphasized that it is investing in new care models. In Arizona, it opened three primary-care locations in partnership with One Medical Group, a practice that focuses on care coordination and making care more accessible through technology. Similarly, it invested in Doctor on Demand, which allows patients to access physicians through mobile devices.
On the acute-care side, Dignity care managers began visiting patients at home within 72 hours after discharge—a program the system says yielded an 80% success rate in preventing readmissions.
Dignity also spent $175 million on capital improvements, such as electronic health records, seismic upgrades and new patient towers at three hospitals in Las Vegas, Chandler, Ariz., and Redwood City, Calif.