Health Care & Life Sciences and Health Care & Insurance

Community posts healthy results, but short of expectations

May 12, 2014

Community Health Network avoided the declines in patient volumes in 2013 that beset the three other major hospital systems operating in Indianapolis. Instead, Community’s challenge was that larger portions of its patients failed to pay their bills, according to publicly filed financial statements.

Those trends led Indianapolis-based Community to bring in more revenue and profit from operations last year. But its profit margins still fell significantly short of its executives' expectations.

Community, which operates eight hospitals and employs more than 500 physicians, earned operating profit of $54.1 million last year, a 13.5-percent increase over 2012. Revenue rose 5.8 percent, to nearly $1.8 billion.

Excluding differences between the two years on special payments from Medicare and Medicaid, as well as on different results from joint ventures and other investments Community does not control, the network would have seen profit nearly triple, to $37.4 million, up from $12.9 million the prior year.

That growth was driven by a 6.25-percent price increase and increased visits from patients across the board:

Inpatient admissions rose 4.6 percent, with a 10.5-percent increase in births.

Emergency room visits shot up 10.9 percent.

Productivity among employed physicians rose 16.6 percent based on a measure called work relative value units.

Imaging scans rose 13.9 percent.

Inpatient surgeries rose 8.8 percent. Outpatient surgeries inched up 0.4 percent.

But Community’s percentage of uncompensated care shot up. It spent $25.5 million more on charity care and $10.3 million more on bad debt.

Uncompensated care rose to equal 5.8 percent of gross patient revenue, up from 4.9 percent last year and a forecast of 4.7 percent.

Community officials have speculated that the closure of Franciscan St. Francis Health’s hospital in Beech Grove sent a large percentage of uninsured patients to Community Hospital East, which saw its percentage of self-pay patients spike to 9.9 percent, up from 7.5 percent the year before.

That increase in unpaid bills dampened Community’s profit margin from operations, which totaled 3.1 percent for the year. That was an improvement from 2.9 percent in 2012 but below Community’s planned 5 percent.

In 2013, Indiana University Health saw somewhat lower profits because of broad declines in patient visits, which were partially offset by price increases. Franciscan Alliance saw a large decrease in profit due to declines in patient visits and higher expenses.

IU Health, Franciscan and St. Vincent Health laid off roughly 900 employees last year. Community let go more than 150 workers.

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