Backus, L+M operated in black in 2019, state report shows

Backus and Lawrence + Memorial hospitals posted positive operating margins last year, according to a report issued Wednesday by the state Office of Health Strategy.

Backus, in Norwich, generated $20.5 million in income from operations as well as $12.6 million in non-operating revenue, including investments, endowments and donations, during the federal fiscal year that ended Sept. 30, 2019. The $33.1 million in “excess” revenues over expenses represented a total operating margin of 8.8%, down from 10.7% in fiscal 2018.

From 2015 to 2019, Backus' average total margin of 16.2% surpassed all other hospitals in the state.

L+M, in New London, had $18.9 million in income from operations and $3.3 million in non-operating revenue, resulting in excess revenue of $22.2 million in fiscal 2019. The hospital's total operating margin was 5.7%, down from 5.9% the previous year.

L+M's five-year average total margin was 4.1%.

Established by the state legislature in 2017, the OHS seeks “to implement comprehensive, data driven strategies that promote equal access to high-quality health care, control costs and ensure better health outcomes for all Connecticut residents.” The agency annually assesses the financial status of the state's 28 acute-care hospitals.

The state defines such a facility as “a short-term hospital that has facilities, medical staff and all necessary personnel to provide diagnosis, care and treatment of a wide range of acute conditions, including injuries.”

Given the period it covers, this year's report does not reflect the

dramatic financial impact of COVID-19 mobilization, equipment procurement, patient treatment and lost revenue, all of which will be reported a year from now, the OHS noted in a news release.

Operating revenues for all Connecticut hospitals totaled $611.9 million, a 12% increase over the previous year, with 20 hospitals achieving a positive total margin, down from 24 in 2018. The report details statewide increases over the past four years in net patient revenue, other operating revenue and total operating revenue, and commensurate yearly increases in expenses.

Statewide, the total margin of revenue over expenses was 5.2% last year, down from 5.9% the previous year. The five-year average total margin also was 5.9%. Uncompensated

care costs, a category that includes charity, or free care, and bad debt, or unpaid charges, totaled $243.8 million for all hospitals in fiscal 2019, an increase of $5.4 million, or 2.3%, over the previous year.

Operating revenues for all hospitals totaled $611.9 million, a 12% increase over the previous year. Non-operating revenues fell 65% to $70.7 million, largely due to fluctuations in the financial markets, the report says.

Among health systems, Yale New Haven Health, which includes L+M, had the highest total margin of $254 million, followed by Hartford HealthCare, including Backus, which earned $181.4 million.

The report is accessible on the OHS website, portal. ct.gov/OHS.