Scripps Health, a four-hospital, San Diego-based system, felt the pinch from higher expenses in fiscal 2015.
Cost increases for salaries and benefits, and supplies and services rose faster than the growth it saw in net patient-service revenue, capitation premiums and provider-fee revenue.
Scripps' compensation costs increased 4.2% while supplies spiked 8.8% and services were up 11.7%.
Yet there were bright spots in the earnings report.
Like other California hospitals, Scripps benefited from the return of the state's provider-fee program, which was on hold last year awaiting CMS approval for its extension. The program supplements Medi-Cal payments.
Provider-fee revenue generated an additional $152.1 million in fiscal 2015, compared to just $21 million in fiscal 2014.
The amount of revenue from capitation premiums also increased to $475.8 million, up 39.5% over last year's $341.1 million.
Healthcare reform has also had an effect. Scripps' charity care costs declined to $32.2 million from $40.7 million year over year. And its provision for doubtful accounts decreased to $28.4 million, or 21% of self-pay accounts, from $44 million, or 23% in the prior year. The system credited its bill-collection efforts and more patients qualifying for government programs for the reduction.
The financial statements did not include patient-volume statistics.
Scripps reported a 2015 operating surplus of $143.5 million on total operating revenue of nearly $2.9 billion, compared with 2014's operating surplus of $154.8 million on operating revenue of $2.6 billion. Scripps' fiscal year ended Sept. 30.
Its 2015 operating margin decreased to 5% from last year's 6%.
