Chesterfield, Mo.-based Mercy, a Catholic system with facilities across seven Sun Belt states, improved its operations in the most recent fiscal year, but steep investment losses wiped away the progress.
This year, many other health systems have lost money in the stock and securities markets, a reversal from the past several years in which investment gains have propped up declining operating margins.
Mercy's hospitalizations, outpatient volumes and emergency room visits all increased heavily in its fiscal 2015, which ended June 30, according to bondholder documents (PDF) filed by the organization. That directly led to larger revenue figures and, when paired with moderate growth in labor and supply costs, a larger surplus from day-to-day operations.
Mercy's operating surplus this year reached $51.8 million, a huge jump from the $2.4 million surplus recorded last year. Those figures exclude any activity tied to Mercy's hospital in Joplin, Mo., which was destroyed by a severe tornado in 2011. Mercy opened up its new hospital in Joplin in March.
However, Mercy tallied a total deficit of $13.1 million in 2015 compared with a $135.7 million surplus last year. In both 2013 and 2014, Mercy reaped hundreds of millions of dollars in investment gains, but that success was not replicated this past year.
Mercy executives were still pleased with the system's core financial numbers, according to the financial disclosure. The results of its Springfield, Mo.-based hospitals and clinics “were positively impacted by growth” from Medicare members with a Humana HMO plan. Last year, Mercy and Humana signed an accountable care contract that would encourage members to receive low-cost care at Mercy facilities in southwest Missouri.
Total revenue across the Mercy system went up 9% year over year, reaching $4.8 billion in 2015. Salaries and benefits rose at a slower pace than the revenue growth, but supplies increased more quickly due to higher prices associated with device implants and oncology drugs, Mercy executives said in the documents.
