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New St. Vincent CEO will inherit financially solid system

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It’s a challenging time to be a hospital CEO, but when Jonathan Nalli takes the helm of St. Vincent Health, he’ll have about as strong a hand as anybody to play.

The Indianapolis-based system has better profit margins, a better payer mix and more outside help, via its parent organization, Ascension Health, than any of its in-state competitors, according to its most recently filed annual financial report.

The only apparent weakness for the 22-hospital, Catholic system is that its physician practices are bleeding cash—but that’s likely the case for St. Vincent’s peers as well.

Nalli, 39, will become CEO in February, after a stint at the for-profit Porter Health System in Valparaiso.

In the 12 months ended June 30, St. Vincent pulled in nearly $2.8 billion from its patients. Before accounting for a $11.5 million restructuring charge due to a massive layoff on June 30, St. Vincent’s profits from operations totaled $167 million.

That’s a profit margin from operations of 6.1 percent. By contrast, Franciscan Alliance had an operating profit margin in 2012 of 3.2 percent and Community Health Network had a profit margin of 2.9 percent. Indiana University had an especially good 2012, and posted a profit margin from operations of 10 percent.

St. Vincent's profit margins are broadly based across its operations. It has 17 hospital operating subsidiaries; 15 of them are making money. And one of those, St. Vincent’s new hospital in Fishers, will almost certainly turn profitable as it establishes more of a presence in that wealthy suburb.

Profit margins are especially attractive at St. Vincent Carmel Hospital (32.2 percent), the St. Vincent Heart Center of Indiana (21.6 percent), the St. Vincent Frankfort Hospital (15 percent) and the St. Vincent Seton long-term-care hospital (14.4 percent). St. Vincent’s flagship campus on West 86th Street has a profit margin of 9.2 percent, which translates into $102.5 million in the most recent fiscal year.

A big part of St. Vincent’s financial success is the fact that it has more patients that pay with private health insurance, which pay hospitals rates that are about 20 percent higher than costs, versus Medicare and Medicaid, which pay hospitals below their costs.

Across St. Vincent’s operations, a whopping 58 percent of its patient revenue came through private health insurance plans. By contrast, Franciscan had 39 percent of its revenue from private insurance plans, IU Health had 42 percent, and Community had 44 percent.

Only 9.5 percent of St. Vincent’s revenue came through the poor-paying Medicaid program. And its level of uninsured patients was lower than the other major hospital chains in Indiana.

The glaring weak spot in St. Vincent’s financial report is the St. Vincent Medical Group, which includes about 800 employed physicians. That group lost $115 million in the most recent fiscal year.

Of course, employing those physicians means they can refer patients to St. Vincent facilities, helping St. Vincent keep its beds and operating rooms full.

Hospital executives in general, however, are trying to minimize losses at their physician practices, so they don’t overwhelm those downstream gains.

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  • RN
    Still work as an RN for St. Vincent. I've been here around three years and have seen such a decline in everything. No raise, no bonus, pay cuts... St. Vincent is a money hungry hospital that doesn't care about anything BUT money. They take away the staff so we cannot spend the time with our patients that needs allowed. It's so sad to see how they were and how the are now....even the last of the nuns left....
  • UNION
    UNITE as one and form a union.....Is there anyone to help us that help others in time of need?
  • STRIKE?
    So when are we going to strike and demand our paycuts back and raises????? I know a lot of employees that would participate...
  • Disappointed
    I am a former employee of St.Vincents. I worked there for over a decade...In all that time never a disciplinary action was given to me, nothing but stellar evaluations. I made one charting error at a time when they were looking to downsize, and bam my job was gone. No warning nothing...I feel that management was told to downsize, and being an LPN, I was expendable. Now just a short time after that all LPN's are being let go. What a nice way to not pay out the measly severance package that I would have gotten. I hope this " ministry" is proud of the decisions it has made at the expense of there loyal employees for an almighty dollar in someone's pocket. You can bet it isn't going to any bedside nurse. I used to be proud to be an employee, and as things move forward I can honestly say I would be embarrassed to be associated in any way with this company. I will never suggest people receive care from such a selfish organization (and by that I mean leadership). It saddens me to see how downhill this company has gone in the last 4 years, and by the looks of the impending changes can only continue on its downward spiral. Good luck to all my former coworkers still plugging away for a company that obviously takes each one of you for granted.
  • Someones full of it.
    865 people being let go was the announced number back in May. There have been plenty of others let go during Oct and Nov that were not announced. We were also told by leaders that the new year would most likly bring more staff reductions. The warm and fuzzy feelings management keeps putting out through meetings and corporate emails have brought moral to an extreme low point. So, either this article is filled with misinformation, or management has been lying to staff about the hospitals financials? A wise person would guess the second. These hospital systems are using Obamacare, and Governor Mike Pence's Healthy Indiana plan as an excuse to make cuts in staff and services, while increasing future profits. When did people think that nonprofit healthcare systems really meant nonprofit? its a business, and Ascension Health/St Vincent, and all the others are in this to make loads of money. Patient care always plays second fiddle to revenue stream.
  • Funny story
    So during the RIF (reduction in force) in June, the geniuses at SVH cut the child protective team in the children's hospital ED. Turns out that the physician time was largely funded by grants. But SVH couldn't get that back. So instead, the foundation sent letters to associates to solicit donations to fund a new child protective team, playing on emotion. After cutting hours, pay , & benefits, SVH wanted associates to fund their mistake. Bravo.
  • SADDENED
    It saddens me to see the treatment of my fellow nurses over the last few months especially after reading this recent article. As one of those nurses terminated I can personally attest to the mismanagement of the floor nurses by mid-level managers. How many nurses could have been saved with all those funds spent on MAGNET status. I would not let anyone I know ever think of going into nursing.
  • Sad for all
    With the cuts that the employees have been handed - Pay cuts, no raises, layoffs, decreased staffing, increased stress and workload, this information is a slap in the face. Each day we are asking more and more of bedside caregivers, and are told it is because of the budget. The morale was sinking to begin with and with one article, it is all but destroyed. Why should the employees give up more and more.....why should the patients care suffer because of it? I am sad for all.
  • RN
    In the days of downsizing, it is apparent that it only applies to those working with direct patient care. Assignments have changed, staffing has been cut, pay has been cut, night shift differential cut, holiday pay cut, profit sharing no longer given, bedside care decreased ancillary assistance decreased, moral decreased. Yet, I would bet the pay for CEO's and upper management have continued without interruption as well as their bonus initiative! Too many really good experienced RN's are gone, you cannot staff any hospital with all new nurses no ancillary help and limited functioning equipment. All the Indianapolis hositals are in a tailspin, it is just so sad what we have become. OBAMACARE is here hope everyone enjoys communist lack of care it is an extension of Hitlers movement! I hope the individuals who voted for this administration need to go to the hospital and experience what they voted for first hand!
  • my experience
    I was delighted with my care at St Vincent's in May of 2013. I told everyone I came in contact with during my 2 weeks there that I had never seen such cooperation and willingness to help in any other hospital. I was not just being complimentary. I was out in the hallways every day for tests, and I NEVER saw a person standing around anywhere. Everyone was on task everywhere I went. I NEVER waited for someone to appear in my room if I had to push a call button. Every person there was willing to help their colleague, and there was never a trace of "that is not my job" to be seen by me. I have followed my 90 year old mother in many Indianapolis area hospitals over the years, and believe me, St. Vincent's was far above the rest, even the brand new ones. If these changes in any way threaten the fabric I saw in operation in May, a truly wonderful and rare thing will be lost. I am sad to read this story, and I hope that St Vincent's will not lose that special lovingness that I saw in play there. As I tried to imagine why I was seeing such effectiveness in May, I surmised that the employees were well-treated and happy. These new measures do not sound like there will be a continuation of good treatment of employees. If not, it is the beginning of the end. I am so sorry to hear it.
  • Trust...what's that?
    My wife is a long-term employee at St.Vincent and I am appalled at the decline in morale and working conditions in the past six months since management began "restructuring"...likely restructuring profits. Perhaps the money spent on consultants could have been spent on maintaining quality staff and programs instead of making unnecessary and chaotic changes in staffing and roles. Tell me how a twenty something consultant with no healthcare experience can make recommendations that management implements without question or input from employees who are knowledgeable. It is disgraceful leadership and certain goes against the so-called "core values". More than one patient has chosen to take their healthcare elsewhere, including me, and more will follow. Where will the profit margin be then?
  • Because healthcare for the rich makes us rich
    ..."And one of those, St. Vincent’s new hospital in Fishers, will almost certainly turn profitable as it establishes more of a presence in that wealthy suburb." YAY! The new 39 year old CEO will be taking his million dollar bonuses off the backs of the physicians and professionals they "laid off" last year due to financial "crisis", in effort to, what was it..."provide better patient care". Lest the organization decreases its profit margin and fall behind. Let's advertise this too - "...financial success is the fact that it has more patients that pay with private health insurance, which pay hospitals rates that are about 20 percent higher than costs..." RIDICULOUS!
  • Management has some answering to do
    I find it interesting that this article was published right on the heals of he hospital informing their employees that will not receive raises or bonuses again this year; citing profitability and uncertainty. I believe this makes 4 continuous years. Not only is a faith based Not for Profit hospital not willing to share with their employees they directly lie to them. Morally wrong in many ways.... I understand that this article upset many nurses. Multiples copies of the article were printed and strategically places around the hospital and nurse's stations. And they should be upset, they can no longer trust their employer. Management has some answering to do.
    • WOW
      So "financially stable" nurses were not given pay raises, several were let go, and vacation time and tuition reimbursement were cut.
    • Screwed
      I guess their profits were worth more to them than the people who worked hard everyday to run their business. The working class gets screwed and, in my case, taken down a peg so a CEO percentage of profits looks good on paper.
    • Can't have it both ways
      If this hospital is financially solid now why did 865 employees lose their jobs from St. Vincent in 2013?

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