Fairview blames hep C drugs for drop in earn­ings

Modern Healthcare - - REGIONAL NEWS - —Michael San­dler

Fairview Health Ser­vices is blam­ing its sec­ond-quar­ter drop in op­er­at­ing in­come on a drop in de­mand for pricey hep­ati­tis C drugs.

The seven-hospi­tal sys­tem’s sur­plus also was re­duced by the con­tin­u­ing shift from in­pa­tient to out­pa­tient set­tings, the Min­neapo­lis-based sys­tem said in its re­cent financial fil­ing.

Fairview, which is ex­plor­ing a merger with the Univer­sity of Min­nesota Physi­cians, reg­is­tered a $36.6 mil­lion op­er­at­ing in­come in the sec­ond quar­ter on rev­enue of $956.7 mil­lion, down 28.8% com­pared with a $51.4 mil­lion sur­plus on $895.7 mil­lion in rev­enue a year ago. It posted an op­er­at­ing mar- gin of 3.8% in the sec­ond quar­ter, com­pared with 5.7% a year ago.

For the first six months of 2015, Fairview’s op­er­at­ing mar­gin was 3.4%, down from 4% in the same pe­riod last year. To­tal op­er­at­ing in­come year over year was $64.2 mil­lion, com­pared with $68.9 mil­lion in 2014. To­tal pa­tient days dropped slightly, but oc­cu­pancy rates rose to 66.8% from 65.7%, as the sys­tem con­tin­ues to shrink its in­pa­tient ca­pac­ity.

In an­nounc­ing its merger plan, Fairview of­fi­cials said the move would pro­vide ad­di­tional resources and en­able it to de­liver bet­ter care. The Fairview and the Univer­sity of Min­nesota boards said in a joint news re­lease this month that they hope to un­veil the fi­nal terms of the merger next spring.

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