Allina posts $146 million operating gain in 2017

Allina Health rounded out 2017 in a better financial position than the previous year, when it suffered an operating loss stemming from costs related to nursing strikes.

The Minneapolis-based not-for-profit health system posted an operating gain of $146 million last year on revenue of $4.1 billion, up from a $16.3 million loss in 2016 on revenue of $3.9 billion. The 2016 loss would have been a $119 million gain if not for $135.6 million in administrative, staffing and travel spending related to the Minnesota Nurses Association strikes that year, according to Allina officials.

David Kanihan, a spokesman for the 12-hospital system, said 2017's performance was boosted by the absence of strike-related costs. But there were other factors at work, too.

"Our financial performance was driven by strong growth due to efforts to ensure access for patients that needed our care, along with management of our expenses through focused efforts," he said

One expense management strategy Kanihan cited: the recruitment of about 1,200 nurses to fill vacancies, some of which were strike related, which he said allowed Allina to cut down on overtime costs and premium pay. That was the most nurses the system has hired in a single year, Kanihan said.

But the system still spent 3.3% more on salaries and benefits in 2017—about $2.6 billion—than it did in 2016. In fact, spending was up in almost every category last year except "other operating expenses," which declined slightly. Allina's total expenses grew by 0.6% in 2017 compared with 2016, including 2016's strike expenses. Without including 2016's strike expenses, expense growth would have exceeded 4% between 2016 and 2017.

Revenues grew at a faster clip, though: rising 4.7% in 2017. That was comprised mostly of net patient services revenue, which increased 4.3% in 2017 to nearly $3.9 billion, up from $3.7 billion in 2016.

Allina's profit, or excess of revenues over expenses, reached $295 million last year, up significantly from $60.6 million in 2016.

Allina is finalizing the insurance plans it will sell through a joint venture with health insurer Aetna. The policies, slated to hit the market as soon as April 1, will include fully-insured and self-insured commercial products, Kanihan said. Allina may also add Medicare Advantage policies in the future. Allina and Aetna first announced their partnership in January 2017.

Aetna has announced several such partnerships with healthcare providers, including with Sutter Health and Texas Health Resources.

Allina issued $231.2 million in bonds last year, although Kanihan did not offer specifics on how the system will use the proceeds beyond "general corporate purposes."