Franciscan cuts its way to higher profits

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About 100 fewer patients per night stayed at Franciscan Alliance hospitals during the first half of the year compared to the same period last year. But Franciscan, which operates three hospitals in the Indianapolis area, offset that nearly 11-percent drop by spending less on staff.

The upshot was profit more than tripling from the same period a year earlier, to nearly $80 million.

The results from Franciscan, headquartered in Mishawaka, largely mirrored those reported earlier this month by Indianapolis-based Indiana University Health.

Franciscan admitted 38,323 patients to its 13 hospitals in Indiana and Illinois, down 10.8 percent. Its average daily census was 975 compared to 1,084 last year.

“The results of operations continue to be influenced by economic and industry-wide challenges including constrained volume growth and cost pressures,” Franciscan executives wrote in their mid-year financial update to bondholders.

Franciscan pulled in revenue from patients of $1.23 billion, a 5-percent increase.

The increase was entirely attributable to larger payments from the Indiana Medicaid program. Franciscan recorded an extra $7.5 million in special Medicaid payments because the programs doled out 12 months of payments this year to make up for 2013 payments that were delayed while the state waiting on federal regulatory approval.

Franciscan was able to save $61.2 million in employee benefits and salaries as well as in physician payments from last year. Franciscan eliminated 925 positions last fall, including 275 at its Indianapolis-area operations.

The result was that Franciscan profit from operations jumped to nearly $80 million from almost $25 million for the same period last year. Both totals exclude the impact of unrealized investment gains and losses, and are adjusted for differences in Franciscan’s special Medicaid payments, its interest expenses, as well as its gains from its ownership of affiliated organizations.

Franciscan, using a slightly different methodology, calculated its profit margin from operations at 5.9 percent during the first half of the year, up from 1.7 percent a year ago.


  • Hmmmm.....
    Joe, Spoken like a true PR Exec cat cover pooh in the liter box.
  • reply to errors
    Community Hospital is the only system to not have layoffs? That is not true. Because I was one of the people who was laid off from East. And all of the LPN's have been laid off. Just because their layoffs were not announced or done all together does not mean people did not lose their jobs. They cherry-picked people from departments one by one. But you add them all up and it's several hundred. And East has had a dramatic drop I in patient beds from 800 to around 125. I know because I worked there for 30 years.
  • Errors
    Community is the only system to not have a layoff. Your comments about why leadership left East and the reduction in beds is inaccurate. Community remains committed to the east side--more so than any other provider for over 50 years and counting. How do you know none of the Health system CEOs have never been patients. Are you kidding me?! Finally, look up the definition of not-for-profit. It doesn't mean you aren't allowed to make a profit. Healthcare needs to change dramatically in this country but get your facts straight.
    • Patients
      The lay offs at Community Health Network, St. Vincent, St. Francis and I U have certainly saved these hospitals a ton of money while paying out a kings ransom to the very people who approve of the lay offs. No CEO should make over a million dollars while laying off a cleaning person making $l8,000. There is something very unethical and immoral about that. And I was laid off in 2010 from Community Hospital East and the layoffs are still happening. They've gotten rid of all of their LPN's. This leaves the RN's having to do everything on the nursing floors. They also got rid of their unit secretaries. The bottom line looks good on paper but I've had a couple of doctors tell me that everyone at East are angry, scared and overworked. So beware patients!!! And "putting patients first" is nothing but a empty slogan. And they are in the process of shipping all of the profitable departments from East to North making east look less and less profitable. I am sure that they would just love to close down Community East if they could get away with it. They went from 800 beds to 125 or so.
    • Aweful Excuses
      I worked for Community Health Network and the reason that senior leadership left is because they were not in agreement with the way the hospital was being ran, how employees were being treated, and most of all how the focus on patient care was nothing more than a poster to stand behind. Hiring these analyst to come out and tell people who have done the job for years that it is all being done wrong now...hint, hint, get rid of employees by calling it "restructuring" is a cheap and easy way out of taking ownership. Indiana is an "at-will" state, so there doesn't have to be a "reason" for dismissal of employment. I have seen former employees that went through this process lose their homes, cars, faith...it is very disturbing. The patient's as well have seen less than disireable care. It all comes full circle.
    • Times Have Changed
      Twenty plus years ago, there was an excellent movie, The Doctor, with William Hurt. He played a surgeon who was diagnosed with cancer and spent time in "his" hospital. It was amazing how he was treated like a common patient. I think this movie should be required watching for all higher-up hospital personnel: the ones who make the decisions to eliminate staff and who seem to have the cavalier attitude that "this won't happen to me..."
    • Smoke and mirrors
      A pathetic way to turn a profit. I too agree with Susan. The leaders of this hospital have never worked in a unit let alone been a patient. It would do them good to get out of their offices, go into the hospital and get to know the very people they let go to keep their extravagant salaries. This hospital was never hurting. It is forever expanding, remodeling, planting trees, paving the parking lot all on the backs of these lost workers. Trees and pavement don’t save lives, the Dr’s, staff and nurses do you let go do! Think about that the next time your laying in a hospital bed.
      • "The Hospital that Cares"
        Well said Susan. I thought they were a "non-profit" organization? I know all hospitals are doing it but the cuts they've made to the actual patient care personnel are embarrassing. They bring in a consulting firm to tell them that they can work with a less nurses per patient ratio. I'm guessing the folks that are making these decisions have never worked in patient care. I hope I never have to spend time there. Meanwhile, the top executives are some of the highest paid in the state.
      • Artifitial profit
        Yeah, they've made more profits on the backs of their laid off workers. That's not profits, it's cutting "expenses". Oh, those pesky staff members who actually take care of patients demanding a livable salary, benefits and maybe a retirement account.

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