Northwestern Memorial HealthCare, a growing Chicago-based system, maintained a strong operating margin during the first year after doubling its size.
Northwestern Memorial and other regional health systems across the United States are striking deals that increase their size and market clout. Northwestern has two acquisitions pending and in September 2014 acquired Cadence Health in a deal that added two hospitals to the system.
A pending deal for KishHealth System, DeKalb, Ill., is expected to close by year-end. Northwestern Memorial also signed a letter of intent last month to acquireMarianjoy Rehabilitation Hospital in Wheaton, Ill., from Wheaton Franciscan Healthcare, which last week announced it is transferring ownership of all of its facilities. Should both deals close, Northwestern Memorial would include seven hospitals.
Cadence Health included Central DuPage Hospital, Winfield, Ill., and Delnor Hospital, Geneva, Ill. KishHealth includes Kishwaukee Hospital in DeKalb and Valley West Hospital in Sandwich, Ill.
The system's rapid growth has so far done little to stifle a healthy operating margin, according to results for its fiscal year ended Aug. 31, 2015. Northwestern Memorial ended the 12 months after the sizable Cadence Health transaction with an operating margin of 5.3%, or a surplus of $207 million on revenue of $3.9 billion. That's compared to an operating margin of 5.9% the year before the deal.
Cadence Health operations accounted for about one-third of the system's total revenue last year and about 46% of its surplus. Including subsidiaries, Cadence Health had a surplus of $952 million on revenue of $1.4 billion.
