Indiana University Health suffered a 46% operating decline to $77.4 million in its second quarter following its divestiture of three hospitals, with the system reporting lower same-facility admissions.
Revenue in the quarter fell 3% to $1.5 billion, from $1.56 billion in the year-earlier period, without the contributions from divested Goshen Health and LaPorte and Starke hospitals. Those were northern Indiana facilities that IU Health deemed non-core.
But even excluding the divested hospitals, inpatient admissions dipped 2% at the 14 hospitals IU Health has owned at least a year for the six months ended June 30 compared with the year-earlier period.
That dip in admissions is consistent with trends reported recently by investor-owned hospital chains HCA, Community Health Systems and Universal Health Services in their earnings releases.
Admissions are slowing as the number of insured Americans has topped out under the Affordable Care Act and Medicaid expansions, as well as the shift of care to less-costly outpatient settings, analysts say.
"In line with industry trends, volumes are moving toward outpatient," IU Health said in a statement Monday.
Total surgeries at the Indianapolis-based system were up 4% for the six months, excluding Goshen, LaPorte and Starke.
IU Health divested the hospitals because they are located far north from the system's base in central Indiana. Northern Indiana patients needing specialty care often travel to Chicago or Michigan rather than to Indianapolis, where the system's academic medical center is located.
Though total revenue fell slightly in the second quarter without the northern Indiana hospitals, operating expenses still increased 1% year-over-year, with salaries, wages and benefits rising 3%, the financial disclosure showed.
"The increase is primarily a result of base pay increases effective in mid-2016, as well as an increase in full-time equivalent employees driven in part by increased surgical volumes," the company said in its analysis.
IU Health's net surplus in the quarter dropped to $130.5 million when non-operating income is included, from a net surplus of $192.8 million in the year-ago quarter.
