Legacy Health in Portland, Ore., saw a sharp drop in its total surplus for fiscal 2016, despite revenue gains for the year.
The six-hospital health system posted $1.78 billion in operating revenue for its fiscal 2016, which ended March 31, a 7.3% increase from $1.66 billion in revenue for 2015. But the year also marked a 54% drop in its total surplus, to $71.1 million from $156.5 million in the previous year, according to financial statements.
Although Legacy's operating margin and income from operations dipped—operating income dropped to $89 million from $121.4 million in one year—its net assets grew from $955.2 million to $1.1 billion. The health system's operating margin dropped to 5% in 2016 compared with 7.3% in 2015.
Legacy had a relatively stable asset and liabilities portfolio, with drops in cash and short-term investments offset by increased property, plant and equipment asset values.
All-in-all, not-for-profit integrated healthcare systems with insurance arms are seeing tighter margins in 2016, with some losing up to half of their daily operations revenue.
In October 2015, Legacy teamed up with PacificSource Health Plans of Springfield, Ore., to create a new health plan that they say will improve access and affordability of care.