WASHINGTON: Cone Health on Wednesday reported a 12.2 percent decline in excess revenue over expenses for fiscal 2014-15 despite benefiting from a sharp increase in flu-related patient care.
The Greensboro health-care system had $1.49 billion in core operating revenue for the fiscal year that ended Sept. 30, up 11.3 percent over fiscal 2013-14. Cone’s acquisition of Alamance Regional Medical Center accounted for some of the higher excess revenue.
However, a 46.7 percent decline in investment income to $15.7 million contributed to Cone Health posting $45.9 million in excess revenue over expenses, compared with $52.3 million in fiscal 2013-14. In a not-for-profit organization, “excess income” is analogous to “profit” in a for-profit organization.
Not-for-profit hospitals depend on investment income to increase their bottom lines and to help pay for capital investments. Novant Health Inc. and Wake Forest Baptist Medical Center also experienced sharp declines in investment income in recent quarters. Cone Health issued the annual report on the Municipal Securities Rulemaking Board’s website, www.emma.msrb.org. The Emma reports are aimed primarily at bondholders and ratings agencies.
Cone’s main presence in Forsyth County is a multipurpose facility at 1635 N.C. 66 South, where it has behavioral health, heart, outpatient, primary, urgent and women’s care services. Cone experienced increased utilization by newly insured patients from the federal health insurance exchanges. For example, inpatient volume rose 6.1 percent to 60,848.
It reported a 5.9 percent increase in emergency department visits to 355,753, a 5.5 percent increase in outpatient visits to 706,327 and an 11.4 percent increase in office visits to 624,904. Cone Health spokesman Doug Allred said an outpatient visit takes place in a hospital, while an office visit primarily takes place in a physician’s office.
Cone’s provision for bad debt rose dropped 2 percent to $122 million. According to the American Hospital Association, bad debt is defined as services for which hospitals anticipate payment from patients who have the financial means but don’t receive it.
Health-care systems nationwide are struggling to adjust to a lower volume of inpatient and elective surgeries, more uninsured people seeking help in emergency departments and reimbursement reductions from Medicare and Medicaid — all of which affect their revenue streams.
The report again did not indicate the operating income that Cone Health received from a relatively new source of revenue known as a Medicaid assessment program. The system reported “other” revenue of $59 million, down 13.4 percent. Medicaid is a federal and state program that primarily pays medical expenses for people meeting federal poverty guidelines.
The assessment program was created by the federal government in 1990, and North Carolina lawmakers approved access to it in March 2011. The program helps pay for North Carolina’s Medicaid financing since ordinary Medicaid payments do not cover the full cost of treating Medicaid patients.
Under the program, hospitals pay a Medicaid assessment to the state, which then allows them to qualify for additional federal money. Hospitals have received up to a $2 federal match for every $1 they provide to the state in the assessment.
