The bump in patient revenue that followed the acquisition of a hospital wasn't enough to offset the accompanying increase in the cost of supplies, salaries and benefits for Chesterfield, Mo.-based Mercy health system, which reported a 58% dip in operating income year-over-year during the quarter that ended Sept. 30.
Mercy saw its operating income fall to $12.4 million in the recently ended quarter, down from nearly $30 million in 2016, according to the health system's latest financial report.
That trimmed its operating margin down to 0.8% as of Sept. 30, a decrease from 2.2% in the prior year's quarter.
A Mercy representative was not available to comment.
In a summary of the report, Mercy said the acquisition of St. Anthony's Medical Center in St. Louis on June 1 boosted its operating revenue by nearly 12% compared with the prior year. The acquisition drove up both inpatient and outpatient volumes. Outpatient visits went up by more than 8.2% year-over-year. Emergency department visits jumped 10.1%. Discharges increased by 16.5%.
That new revenue was surpassed by an uptick in expenses, however. Expenses increased by 13.5% during the same time period. Mercy attributed the additional expenses mostly to higher supply and personnel costs. Salaries and benefits as a percent of patient revenue, for example, increased two percentage points to 61.2% over the prior year.
Mercy also saw a significant increase in accounts receivable as of Sept. 30 from the prior year: $133.6 million compared with only $69 million in 2016.
Mercy's bad debt was up as of Sept. 30: $37.7 million compared with $25 million the same time in 2016.
St. Anthony's became Mercy's fifth acute-care hospital in the greater St. Louis region. It's the third-largest hospital across Mercy's four states, according to the health system.