Health plan losses kept Banner Health from a breakout 2016.
Phoenix-based Banner, which runs 28 hospitals across seven states, saw operating losses in its insurance operations widen to $153.8 million in 2016, compared with an operating loss of 38.7 million in 2015, the company disclosed this week.
The company also posted operating losses stemming from recently acquired hospitals and urgent-care operations in Tucson, Ariz. Banner Payson (Ariz.) Medical Center, Banner Fort Collins (Colo.) Medical Center and Banner Urgent Care, all acquired in 2015 and 2016, combined to post operating losses of $88.9 million in 2016 compared with losses of $69.8 million in 2015.
Despite the losses in insurance and some stemming from its Tucson hospitals, Banner still posted a healthy operating gain over 2015.
Banner reported total system operating income of $157.1 million on revenue of $7.63 billion in 2016. That compared with 2015 operating income of $128.4 million on revenue of $6.97 billion.
Banner attributed its insurance performance to losses on its Medicare Advantage risk contracts and high-cost enrollees migrating to Banner's narrow network products in the face “of the collapse of Arizona's Affordable Care Act marketplace,” the system said.
The insurance operations, which posted revenue of $1.2 billion in 2016, also were hurt by the performance of its University of Arizona Health Plans, which lost an administrative support agreement with another Arizona Medicaid plan.
Across its system, Banner saw acute and observation cases increase 2.3% to 338,518. Emergency room visits rose 3.5% to 1.1 million. Surgical volumes increased 4.9%, with outpatient surgeries making up 64.1% of the volume compared with 63.3% in 2015.
Hospitals and operations that Banner owned before 2015 led the way in income gains. Those facilities posted operating income of $306.2 million in 2016, an operating margin of 5.3%, compared with operating income of $172.9 million in 2015, for an operating margin of 3.1%