Trinity Health tightened its grip on the New York market with the long-awaited acquisition of St. Joseph's Hospital Health Center in Syracuse, N.Y. But the deal brought pluses and minuses to Trinity's bottom line during the first quarter of the system's fiscal 2016.
Livonia, Mich.-based Trinity first announced plans to acquire the New York hospital in July 2013. That deal failed to materialize and Trinity and St. Joseph's instead entered a strategic affiliation. Trinity finally struck a deal to acquire St. Joseph's on July 1.
The acquisition was a revenue boon for Trinity, and total revenue skyrocketed 10% for the first quarter of 2016, compared with the same period last year. Revenue from acquiring St. Joseph's accounted for $162.9 million of the increase, according to Trinity. Excluding the acquisition, revenue grew because of volume growth, an increase in payment rates and a decrease in provision for bad debts because of the impact of the Affordable Care Act, the system reported. In fact, 13 of the system's 19 markets experienced an increase in case mix adjusted equivalent discharges.
But the deal came with costs, as well. Trinity's operating surplus plunged 51.7% compared to the same period last fiscal year. The acquisition unfavorably affected operating surplus with an $8.1 million operating loss, the system said.
Overall, Trinity saw $48.3 million in operating surplus on $3.8 billion in total revenue for first quarter 2016, compared to $100 million in operating surplus on $3.5 billion in total revenue during the prior year quarter.
The system's operating margin was 1.3% in the first quarter, falling from 2.9% during the same time frame in 2015. Increased labor, supply costs and purchased services costs led to the difference in margins, Trinity reported. Labor costs shot up 66.4% compared with the first quarter of last fiscal year.
Like other hospital systems around the country, Trinity saw an uptick in outpatient visits, which rose 4.7% compared with the previous year's first quarter. Meanwhile, emergency visits rose 6.7%.