Trinity Health operating income climbs amid steep impairment charge
Trinity Health recorded heavy impairment charges in its fiscal 2018 that were due in part to the health system's transition to a single, enterprise-wide electronic health record system.
The Livonia, Mich.-based health system recorded $264.4 million in asset impairment charges in its fiscal 2018, which ended June 30, which officials wrote in a news release was due in part to migrating its more than 90 hospitals and more than 100 continuing-care facilities to a single version of Epic, a process that's expected to take over four years. The undertaking comprised 41% of the total impairment charges.
"The single, fully integrated record system will enable Trinity Health to improve the experience of both its patients and physicians," the health system said in the release.
Not-for-profit Trinity reported operating income of $401.3 million in its fiscal 2018 and not including the impairment charge, up about 50% from the prior year, in which it was $266.1 million. Trinity's operating margin was 2.2% in the recently ended fiscal year, compared with 1.5% in fiscal 2017.
The health system saw its revenue increase 4.1% to $18.3 billion in fiscal 2018, 1% of which was from the acquisitions of MacNeal Hospital in Berwyn, Ill., in March and St. Mary's Health System in Waterbury, Conn., in 2016. Excluding the $176.9 million that came from the acquisitions, Trinity said the revenue increase was primarily due to volume growth, payment rate increases and case mix improvements, and tempered by continued unfavorable payor mix. The report did not disclose Trinity's payor mix, and a spokeswoman could not provide it by press time.
"Throughout fiscal year 2018, we kept our focus on improving performance across all aspects of our people-centered care continuum which helped buffer continued unfavorable industry trends," Ben Carter, Trinity's chief financial officer, said in a statement. "In particular, our efforts centered on clinical and administrative efficiencies related to both productivity and supply costs, as well as improving performance in value-based care delivery models."
Trinity's discharges were down slightly in 2018, rounding out the fiscal year at 585,000, compared with 586,000 in fiscal 2017. Patient days were relatively unchanged at 2.7 million. Outpatient visits grew 2.3% to 20 million, while emergency room visits didn't fluctuate significantly, remaining at 2.4 million year-over-year. Surgeries also held steady year-over-year at 413,000.
The health system's home health admissions also declined slightly, from 97,000 in fiscal 2017 to 95,000 in fiscal 2018. Long-term care patient days declined from just under 1.2 million in fiscal 2017 to about 1.1 million in fiscal 2018.
Expenses related to the MacNeal and Saint Mary's acquisitions accounted for $186.9 million, or 1% of the increases in expenses, which totaled 3.4% year-over-year. Trinity's total operating expenses were $17.9 billion in fiscal 2018.
Trinity's net income was $901.5 million in its fiscal 2018, compared with $1.3 billion in fiscal 2017, which the system said was primarily related to lower nonoperating investment income. Trinity's nonoperating gains totaled $812.2 million in its fiscal 2018, compared with $1.4 billion in fiscal 2017. The change was due mostly to a $371.2 million decline in investment earnings.
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