Catholic Health Initiatives, a rapidly expanding system in the midst of restructuring, posted stronger financial results in its fiscal 2015 as it saw the payoff of stronger patient volume and cost-cutting efforts.
Englewood, Colo.-based CHI improved its financial performance for 2015 after struggling with a negative operating margin and credit-rating downgrades over the past few years.
CHI made a number of strategic acquisitions in that time frame, which boosted revenue but also swelled its expenses. But for 2015, it managed to get on top of its costs, and the system said its growth strategy is starting to yield a return.
In Texas, for instance, a booming market that CHI entered just last year, it now has $2 billion in annual revenue. It also continued to benefit from its turnaround strategy in Kentucky, where it is seeing higher patient volume and better cost control in subsidiary KentuckyOne Health.
Without breaking out patient volume numbers, CHI also highlighted growth in its Iowa, Minnesota, North Dakota and Pacific Northwest markets.
As of mid-July, CHI also is back in-network with Nebraska's Blue Cross and Blue Shield plan, the state's largest commercial insurer. A contract dispute had depressed its financial performance in that market over the past fiscal year.
CHI also reported growth in premium revenue in its Prominence Health subsidiary, which operates Medicare Advantage and commercial products in six states. The system entered the insurance market in 2012.
For the year ended June 30, CHI reported $416.4 million in insurance premium revenue, more than double the $171.5 million in premium revenue it saw during the previous fiscal year.
Before accounting for restructuring costs, CHI reported an operating surplus of $169.8 million (PDF) on $15.2 billion in revenue, an operating margin of 1.1%. That compares to a pre-restructuring operating surplus of $7.9 million on $13.6 billion in revenue for fiscal 2014.
After restructuring costs, its surplus was $3.1 million compared with 2014's operating loss of $109.4 million. However, like many of its peers, CHI also booked lower investment income in 2015, leaving it with an excess of revenue over expenses of $93.6 million compared with the prior year's $642.6 million.
CHI is continuing to grow. On Aug. 1 the system entered into a joint operating and management agreement with Longmont (Colo.) United Hospital. But it also moved forward on plans to prune its portfolio, completing the sales of hospitals in Reading, Pa., and Denville, N.J., in July.
