Texas Health Resources continued to see higher patient volume through the third quarter of 2015, but faced financial challenges from higher expenses, investment losses and changes to the state's Medicaid waiver program.
The Arlington, Texas-based system reported that discharges increased 4% while non-physician outpatient visits were up 3.8% during the nine-month period ended Sept. 30. The patient volume growth contributed to a 2.8% increase in operating revenue year over year.
However, higher volume has meant more costs, particularly for labor and supplies. The system's expenses continued to outpace revenue growth and increased 4% in the first nine months of the year compared to the prior-year period.
In total, the system reported an operating surplus of $183.9 million on $3.1 billion in operating revenue for the first nine months of the year compared with an operating surplus of $210 million on $3 billion in operating revenue during the same period last year.
Non-operating losses, mostly due to unrealized losses on its investments, totaled $138.6 million in the period compared with the prior year's gain of $85.8 million.
Texas Health also changed the timing of when it recognizes revenue from the 1115 Waiver program after the total pool of funds available for private hospitals was reduced. That meant a $23.6 million reduction in funding in the second quarter, but an additional $34.4 million in revenue recorded in the third quarter.
After the quarter ended, Texas Health forged an agreement to form a 50/50 joint operating company with UT Southwestern Medical Center. The agreement will bring together UT Southwestern's William P. Clements Jr. University Hospital and Zale Lipshy University Hospital with Texas Health's Presbyterian Hospital in Dallas.
It will combine about 3,000 physicians when it goes live in the first quarter of 2016.
Texas Health's 24 other hospitals also will gain access to the academic medical center's tertiary and quaternary care resources.