While Ascension Health, the largest not-for-profit health system in the U.S., is benefiting from Medicaid expansion, its operating margin dipped slightly in its most recent quarter as expenses rose faster than the revenue gains.
Ascension, which operates 131 hospitals in more than 20 states, posted a $112 million operating surplus on $5.19 billion in revenue in its fiscal 2016 first quarter. which ended Sept. 30. That's down 5.2% from the $118 million surplus on $5.11 billion in a comparable quarter a year ago. Its operating margin shrank to 2.8% from 3.0% a year ago.
With fewer uninsured, Ascension saw a major decrease in uncollectable bills from patients now covered by some form of insurance. Medicaid expansion also helped grow the number of patients the 21,000-bed system saw in the most recent quarter, said Nick Ragone, chief communications and marketing officer.
“Inpatient admissions and equivalent discharges increased in part due to expanded health insurance coverage as provided by the Affordable Care Act,” Ragone said.
Overall, uncompensated care fell to $277 million last quarter compared to $308 million a year ago. But shrinking charity care was accompanied by greater demand for services from the newly insured, which drove overall expenses 1.6% higher compared to last year. Salaries, wages and employee benefits rose $70.7 million over a year ago and supply expenses increasing by $29.7 million.
On the non-operating side, market declines hit the system's $29.6 billion investment portfolio hard. Ascension reported an overall net loss of $682 million for the quarter.
“While our investment results continue to fluctuate, we maintain a consistent, long-term investment strategy," Ragone said.
