In Roads
MARCH 21, 2014
Inside information for the employees of Mercy Medical Center
First Half Results Lifted by Investments and Large One-Time Gain Dignity Health’s financial performance improved during the first half of 2014. We reported operating income of $273 million for the period ending Dec. 31 compared to $72 million for the same period last year. But to get the true picture of the first half of our fiscal year, we need to take a closer look Optum360: Operating income was enhanced by a one-time gain from the Optum360 transaction. The $171 million accounting gain did not generate cash for Dignity Health. Optum360 is a partnership to provide revenue cycle services to Dignity Health and other healthcare systems. This partnership is important because it will streamline our revenue cycle process and lead to a better patient experience as well as higher cash collections from insurance companies and other payers. Operating Profit: Without the Optum360 gain, we made $102 million in the first half of the year from the operation of our care centers. Our operating margin, or the profit percentage from operating our facilities, was just 1.9 percent (excluding the Optum360 transaction). That means we earned just under 2 cents on every dollar in revenue. Patient Volumes: The decline in inpatient volumes, which we have seen over the last three years, has continued. Inpatient admissions were 2.6 percent lower than the same sixmonth period a year ago. Conversely, our outpatient volumes are continuing to grow and were up 2 percent versus a year ago. The outpatient trend is encouraging for Dignity
Health because serving patients in outpatient settings will be key to the organization’s success under health care reform. Commercial Payers: The mix of commercial payers (Blue Cross, Blue Shield, etc.), who pay more for our services versus government payers (Medicare and Medicaid) and selfpay patients, continued to decline. This erosion in our revenues has been an ongoing trend at Dignity Health that has contributed to our financial challenges over the last four years.
“Not all of us can do great things. But we can do small things with great love.” -Mother Theresa
Mercy’s 2014 5K Stroke Awareness Run
Costs: We are seeing significant savings by centralizing and standardizing the way we purchase services and supplies. Income from Investments: While operating income is the real measure of the strength of a healthcare organization, our investment performance, important for funding expansion and the replacement of equipment, was stronger than expected. It totaled $411 million for the period. For the remainder of the fiscal year, we don’t expect investment returns to be as strong. “Looking ahead, Dignity Health and our industry will continue to be challenged by new government mandates and changes in the healthcare environment,” said Mary Connick, Senior Vice President Finance and Corporate Controller. “That’s why it’s more important than ever to focus on our healing mission and to treat our patients, our communities and each other with humankindness. That’s what we do best. And it’s what sets us apart from other health-care providers.”
Register today at: http://www.supportmercymerced.org/ Events_And_Campaigns/5K
Living Spirituality by Sister Lucille Carreau, DHS Asst. Director of Spiritual Services
Thought
Giving care is sacred. Recognize that your actions are prayer in motion.
Practice
As you care for someone (patient, family member, co-worker), as you move try to be more conscious of the sacredness of care and make it a true prayer. In Him, we live and move and have my being. (Acts 17:32)