Temple University Health System substantially narrowed its net loss in the first quarter of its fiscal year compared with a year ago. But lower-than-expected outpatient revenue and lower surgical volume at its Jeanes Hospital prevented the system from realizing an anticipated surplus.
The system's net loss in the quarter was $964,000 compared with $8.9 million in the year-earlier quarter. The result, however, was disappointing given that the system had budgeted for a $1.1 million net gain, according to unaudited financial results filed to bondholders.
Expectations were running high after the three-hospital system posted a rare operating surplus in its 2015 fiscal year ended June 30. On the strength of a turnaround plan that stressed higher acuity services over admissions from the emergency department, Temple posted a $9.3 million operating surplus on $1.5 billion in revenue versus a nearly $10 million operating loss in the previous fiscal year. It was its first annual operating surplus since at least 2011.
But that could not be sustained in the first quarter. Outpatient revenue fell $3.8 million below budget, driven by a weaker payer mix, declining returns from outpatient retail pharmacy volumes at the main hospital and surgical cases that were 19% below budget at Jeanes. Meantime, Temple's American Oncologic Hospital exceeded budget, especially because of better-than-expected volumes for chemotherapy infusions and radiation therapy procedures.
The system's liquidity also took a hit in the quarter. It fell to $337.4 million as of Sept. 30, compared with $381.1 million at the close of the previous quarter. The $43.7 million decrease was due to a lag in collections of $22 million, partially due to a billing systems conversion, as well as delayed supplemental payments of $16 million from the state Department of Human Services.
