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November 29, 2017 12:00 AM

Missouri's Mercy health system attributes 58% drop in operating income to hospital acquisition

Tara Bannow
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    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.

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          • - Luminaries
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          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
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      • Podcast - Beyond the Byline
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