Prov­i­dence hit by pay­ment cuts, fewer pa­tients

Modern Healthcare - - REGIONAL NEWS - —Beth Kutscher

Prov­i­dence Health & Ser­vices re­ported that its op­er­at­ing in­come came in lower than ex­pected in 2013 as flat in­pa­tient vol­umes and an ad­verse payer mix de­pressed gains.

The Renton, Wash.-based sys­tem re­ported $37.7 mil­lion in net op­er­at­ing in­come for its fis­cal 2013, ended in De­cem­ber, which was 81.5% be­low the $204.1 mil­lion it earned in 2012. Rev­enue rose about 5% to $11.1 bil­lion, from $10.6 bil­lion in 2012.

While in­pa­tient vol­ume was nearly flat, de­clin­ing only 0.1%, the sys­tem re­ported that its commercial vol­ume was 4.9% lower than ex­pected, and in­stead, it saw a greater per­cent­age of Medi­care and Med­i­caid pa­tients. But re­im­burse­ment cuts un­der se­ques­tra­tion meant a $45 mil­lion re­duc­tion in Medi­care rev­enue, and a de­lay in Wash­ing­ton’s provider tax pro­gram fur­ther re­duced Med­i­caid rev­enue by $23 mil­lion, ac­cord­ing to the sys­tem’s earn­ings re­port.

“For a mis­sion-driven or­ga­ni­za­tion, our abil­ity to in­crease com­mu­nity-ben­e­fit spend­ing is the mea­sure of fi­nan­cial health,” Prov­i­dence Chief Fi­nan­cial Of­fi­cer Todd Hofheins said.

The sys­tem in 2013 ex­ceeded its tar­get for com­mu­nity ben­e­fit spend­ing and pro­vided more than $951 mil­lion for pro­grams that in­creased ac­cess to care and im­proved the health of com­mu­ni­ties, he added. It also in­creased cash and in­vest­ments on its bal­ance sheet by $473 mil­lion over the pre­vi­ous year.

Prov­i­dence has forged a num­ber of af­fil­i­a­tions over the past two years, in­clud­ing its Fe­bru­ary 2012 ac­qui­si­tion of Swedish Health Ser­vices, Seat­tle, and its July 2012 tie-up with Facey Med­i­cal Group, which op­er­ates 10 clin­ics in South­ern Cal­i­for­nia.

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