Wheaton Franciscan Services posted a higher surplus for the year ended June 30 after the Illinois-based system saw a sharp decrease in uncollectable bills from patients who are now covered by Medicaid.
The Catholic healthcare system, sponsored by Franciscan Sisters, Daughters of the Sacred Hearts of Jesus and Mary, operates 14 hospitals in Illinois, Iowa and Wisconsin. Eight of those hospitals are in southeast Wisconsin. Its four hospitals in Milwaukee and Racine serve a disproportionate share of Medicaid and uninsured patients.
According to the report, released Oct. 19, the system's surplus growth can be attributed to hospital programs that assisted self-paying patients in joining Medicaid plans. Other formerly self-paying patients moved into marketplace plans in the three states, said Anne Ballentine, a Wheaton Franciscan spokesperson.
“Childless adults in Wisconsin, who are now eligible for Medicaid, made up the majority of the growth we have seen,” Ballentine said in an e-mail. “While this is an improvement, there is still a significant amount of write-off associated with those Medicaid patients.”
Uncompensated care reported by Wheaton Franciscan fell to $44.9 million in 2015 compared to $74.5 million in the previous year.
That helped Wheaton Franciscan report a $69 million operating surplus on $1.59 billion in revenue in 2015, up 158% from the $26.8 million surplus on $1.54 billion a year ago. The operating margin was 4% this year compared to 1.7% last year.
Despite the improvement in operating results, the Catholic system's $76.1 million surplus on $1.8 billion in total revenue in 2015 was actually down slightly from the $77.5 million surplus on $1.75 billion in total revenue it posted last year. The system's investment returns plunged from $51 million in 2014 to just $6.8 million last year.
In addition to the impact of the Affordable Care Act and Medicaid eligibility changes, Wheaton Franciscan improved its operating results by decreasing its health plan and pension costs, Ballentine said. Continued initiatives to increase efficiency also played a role.
In addition to Medicaid expansion, other reimbursement agreements with commercial insurance companies, HMOs and preferred provider organizations have contributed to Wheaton Franciscan's surplus, according to the report.
Ballentine said that they do not expect to see revenue increase in 2016. “We do not expect further shifting of self-pay patients to Medicaid this year,” she said.
In addition, Ballentine said the system's pension expenses will be significantly higher this year due to lagging stock market performance.