Fairview Health Services is blaming its second-quarter drop in operating income on a drop in demand for pricey hepatitis C drugs.
The seven-hospital system's surplus also was reduced by the continuing shift from inpatient to outpatient settings, the Minneapolis-based system said in its recent financial filing.
Fairview, which is exploring a merger with the University of Minnesota Physicians, registered a $36.6 million operating income in the second quarter on revenue of $956.7 million, down 28.8% compared with a $51.4 million surplus on $895.7 million in revenue a year ago. It posted an operating margin of 3.8% in the second quarter, compared with 5.7% a year ago.
For the first six months of 2015, Fairview's operating margin was 3.4%, down from 4% in the same period last year. Total operating income year over year was $64.2 million, compared with $68.9 million in 2014. Total patient days dropped slightly, but occupancy rates rose to 66.8% from 65.7%, as the system continues to shrink its inpatient capacity.
In announcing its merger plan, Fairview officials said the move would provide additional resources and enable it to deliver better care. The Fairview and the University of Minnesota boards said in a joint news release this month that they hope to unveil the final terms of the merger next spring. —Michael Sandler