Most state health sys­tems in the black

Connecticut Post - - BUSINESS - By Mackenzie Rigg CT MIR­ROR

Nine of the 16 health sys­tems in Con­necti­cut ended 2017 in the black, ac­cord­ing to a re­port by the state Of­fice of Health Strat­egy.

Col­lec­tively, the sys­tems took in about $14.2 bil­lion in the fis­cal year that ended on Sept. 30, 2017. Af­ter ex­penses, this left about $580 mil­lion — a 4.1 per­cent to­tal mar­gin.

The to­tal mar­gin in 2016 was 6.2 per­cent.

Some health sys­tems only have one hospi­tal, such Grif­fin Health in Derby, but also have out­side med­i­cal prac­tices, while oth­ers, like Yale New Haven Health, have mul­ti­ple hos­pi­tals and an ar­ray of out­pa­tient ser­vices.

“This re­port is one data point in­form­ing our over­all work to bring down the high cost of health care and im­prove ac­cess to care,” said Vicki Vel­tri, ex­ec­u­tive di­rec­tor of the Of­fice of Health Strat­egy. “It is im­por­tant to look at the whole pic­ture re­lated to health sys­tem fi­nan­cial sta­bil­ity, though, and while this re­port is valu­able for its data, it also gives us a start­ing point to ask more

ques­tions about how our hos­pi­tals and health sys­tems are do­ing in the longer term.”

While the to­tal mar­gin was 4.1 per­cent, sev­eral hospi­tal of­fi­cials at Tues­day’s Health Care Cabi­net meeting fo­cused on the op­er­at­ing mar­gin for the sys­tems, which was neg­a­tive 1.7 per­cent.

The op­er­at­ing mar­gin in­cludes the ex­penses re­lated to run­ning the health sys­tem and the money the sys­tem takes in, such as pay­ments from in­surance com­pa­nies. The to­tal mar­gin also in­cludes other fund­ing sources, like in­vest­ments, en­dow­ments and do­na­tions.

In 2016, the op­er­at­ing mar­gin for health care sys­tems was neg­a­tive 0.9 per­cent.

“If you look at the op­er­at­ing per­for­mance, it’s neg­a­tive and it’s de­clin­ing year over year,” said David White­head, ex­ec­u­tive vice pres­i­dent and chief strat­egy and trans­for­ma­tion of­fi­cer at Hart­ford Health­Care, af­ter the meeting.

White­head said the in­dus­try stan­dard for a healthy op­er­at­ing mar­gin is about 4 per­cent.

“That’s re­ally main­tain­ing the in­vest­ments we’ve made, in­clud­ing the in­vest­ments in these med­i­cal groups, the in­vest­ments in home care, and the in­vest­ments in new modal­i­ties of care that don’t ex­ist just within the four walls of the hospi­tal,” he said.

Stephen Frayne, se­nior vice pres­i­dent of health pol­icy at the Con­necti­cut Hospi­tal As­so­ci­a­tion, said in a state­ment that the lead­ing cause of the neg­a­tive op­er­at­ing mar­gin “is the con­tin­u­ing need to sub­si­dize physi­cian prac­tices to main­tain needed ac­cess to care.”

“In­de­pen­dent physi­cian prac­tices that are strug­gling to sur­vive look to larger or­ga­ni­za­tions, such as hos­pi­tals, for sup­port,” Frayne said.

“A hospi­tal can­not op­er­ate with­out physi­cians, and it is es­sen­tial to keep ac­cess to doc­tors in the com­mu­nity, so the prac­tice de­cides to be­come part of the hospi­tal sys­tem.”

Frayne said that in 2015, hos­pi­tals pro­vided $208.5 mil­lion in physi­cian prac­tice sub­si­dies. In 2016, hos­pi­tals pro­vided $237 mil­lion in sub­si­dies. In 2017, they pro­vided $241 mil­lion.

The 150-plus-page re­port is crafted each year, us­ing hospi­tal au­dited fi­nan­cial state­ments, an­nual re­ports and other data sub­mis­sions to the state. The re­port also in­cludes de­tailed ac­counts of each hospi­tal’s fi­nan­cial per­for­mance.

OHS of­fi­cials ex­plained two one-time sit­u­a­tions that af­fected the mar­gins of Vas­sar Health Con­necti­cut, which used to be af­fil­i­ated with Sharon Hospi­tal, and the Univer­sity of Con­necti­cut Health Cen­ter.

Vas­sar Health re­ported about $27 mil­lion in non-op­er­at­ing rev­enue due to Sharon Hospi­tal’s sale to HealthQuest. UConn Health Cen­ter re­ceived $322 mil­lion in state and cap­i­tal ap­pro­pri­a­tions, which also was re­flected in the hospi­tal’s non-op­er­at­ing rev­enues.

Vel­tri said her of­fice will be ex­am­in­ing the hospi­tal and health sys­tem re­port to­gether with other data sets and re­ports, like the re­cently re­leased fa­cil­ity fees study, to get a clearer pic­ture of the state’s ex­pan­sive and ex­pen­sive health care sys­tem.

Vel­tri said the ul­ti­mate ques­tion they want to an­swer is: “How do all these pieces of data tie to what … all of you might see in your pre­mium and in your out-of-pocket costs?”

“That to me is the real ques­tion and I don’t think we’re quite there an­swer­ing that,” said Vel­tri, the for­mer chief health care pol­icy ad­viser to Lt. Gov. Nancy Wy­man. “We do know health care costs are a sig­nif­i­cant prob­lem in the state of Con­necti­cut and I think everyone has to own that, re­gard­less of where you sit around the ta­ble.”

Hearst Con­necti­cut Me­dia file photo

The Univer­sity of Con­necti­cut Health Cen­ter in Farm­ing­ton.

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