Author Archives: henrykotula

Cleveland Clinic more than quadruples operating income

Posted on by • Posted in Health System, Hospital, Hospital Industry, Net Income, Nonoperating Income, Operating Income, Operating Margin, Operating Performance, Operating Revenue • Leave a comment

https://www.beckershospitalreview.com/finance/cleveland-clinic-more-than-quadruples-operating-income.html

Cleveland Clinic’s revenues and operating income increased year over year in the second quarter of 2019, according to unaudited financial documents.

Cleveland Clinic’s revenues climbed to $2.7 billion in the second quarter of this year, up 20 percent from $2.2 billion in the same period of 2018. The boost was largely attributable to higher net patient service revenue, which increased 20.5 percent year over year.

The system’s operating expenses were up 16 percent year over year in the second quarter of 2019. Expenses grew across all categories, including supplies, administrative services, and salaries, benefits and wages.

Cleveland Clinic ended the second quarter of 2019 with operating income of $116.2 million, up from $25.1 million in the second quarter of last year. The system’s operating margin was 4.4 percent in the second quarter of this year, compared to an operating margin of 1.1 percent in the same period of 2018.

During the second quarter of this year, Cleveland Clinic’s nonoperating gains totaled $110.3 million. That’s compared to the second quarter of 2018, when the system reported nonoperating gains of $55.6 million. The system said the increase was primarily attributable favorable changes in the financial markets.

Cleveland Clinic ended the second quarter of 2019 with net income of $226.5 million, up from $80.7 million in the same period a year earlier.

 

California legislature passes bill requiring Kaiser Permanente to follow financial disclosure laws

Posted on by • Posted in Health Policy, Health System, Hospital, Hospital Industry, Transparency • Leave a comment

https://www.healthcarefinancenews.com/node/139106?mkt_tok=eyJpIjoiT1RkbU5UVXpNMlkyTm1NeiIsInQiOiJ3YVpITnV3WlVcL0dzcGgxQVkxMHFBZjFOSFZLXC9SZ0pHd3ZuUE5aWGt6MHMxbXpoMG9GeDJxSUc1cVVjXC9cL2loR2tnd1lXb050QzFXXC9SU2hHQnZZQVdWQ1lZNlMwRTFWbXV2TUIwXC9MMlNYcFwvdkluODBUWXRwaEdHZTNndUZYN3QifQ%3D%3D

The bill would require Kaiser Permanente to provide more data about the revenue and profits of individual hospitals.

Legislation requiring healthcare giant Kaiser Permanente to follow more of the same financial disclosure laws as other healthcare providers in California passed the Senate Monday and now heads to Gov. Gavin Newsom, who has 10 days to decide whether to sign it into law.

The bill, SB 343, would require Kaiser Permanente to provide more data about the revenue and profits of individual hospitals, whereas now it lumps those figures for all facilities into two broad categories: “Northern California” and “Southern California.” Of the roughly 400 hospitals operating in California, all but the 35 owned by Kaiser Permanente must comply with financial reporting requirements on a per-facility basis.

WHAT’S THE IMPACT

The new requirements for Kaiser Permanente would include breaking out expenses and revenue at each facility; breaking out revenue by type of payor at each facility (Medicare, Medi-Cal or private insurance); and breaking out rate increases by type of service (hospital, physician services, pharmacy, radiology and laboratory).

For Kaiser Permanente to comply with the legislation, it is estimated it would need to hire two workers to compile and distribute related data on a quarterly basis. The corporation has 250,000 employees and operating revenue of nearly $80 billion.

Kaiser Permanente, despite being a nonprofit healthcare system, has reported $11 billion in profits since Jan. 1, 2017 — including $5.2 billion just in the first half of 2019. It has made more in profits in the first six months of 2019 than it has ever recorded in an entire year and sits on reserves of more than $37 billion. Meanwhile, premiums for Kaiser patients have gone up year after year as part of a rate-setting process.

With Kaiser controlling more than 65% of insured Californians with large group healthcare coverage, SB 343 would allow employers and others to negotiate fair rates when purchasing health insurance for their workers.

The measure passed the California Assembly 58-13 on Aug. 22, and it is supported by a coalition of healthcare, consumer, business and worker advocates.

Kaiser Permanente did not immediately respond to a request for comment.

THE LARGER TREND

In June, Kaiser Permanente announced plans to construct a new headquarters — The Kaiser Permanente Thrive Center — in Oakland, bringing together staff currently spread out across multiple locations. The health system said the impetus behind the $900 million project is reducing annual operating costs and delivering more affordable care and coverage.

Officials say the new downtown Oakland building will reduce operational costs by more than $60 million annually, addressing facilities maintenance, inefficient utility expenses, and rising commercial real estate leases. Reinvesting these savings will help the health system advance its mission of providing quality, affordable care.

ON THE RECORD

“For too long, Kaiser Permanente has operated under a different set of rules when it comes to financial transparency, and this bill will finally bring the corporation more in line with other hospitals and insurance companies,” said Sen. Richard Pan, D-Sacramento, the author of SB 343. “Employers and individual Kaiser customers deserve to know if they are getting value when Kaiser increases their premiums and copays.”

 

 

DOJ investigates Providence St. Joseph Health’s Swedish Health Services

Posted on by • Posted in Civil Investigation, Compliance Issues, Dept of Justice (DOJ), Health System, Hospital, Hospital Industry, Net Income, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Restructure, Stark Law • Leave a comment

https://www.modernhealthcare.com/providers/doj-investigates-providence-st-joseph-healths-swedish-health-services?utm_source=modern-healthcare-daily-finance-thursday&utm_medium=email&utm_campaign=20190829&utm_content=article1-readmore

The U.S. Department of Justice is probing Providence St. Joseph Health’s Swedish Health Services in a civil investigation, the not-for-profit integrated health system revealed in its recent quarterly earnings report.

The DOJ requested documents from Seattle-based Swedish related to certain arrangements, joint ventures and physician organizations, according to the report. Providence St. Joseph said that the investigation will not have a “material adverse effect” on its financials.

“Like all large institutions, Swedish is subject periodically to investigations and lawsuits,” Swedish said in a statement. “Per our policy, we are not able to discuss the specifics of any investigation. However, Swedish fully cooperates with all investigations.”

Renton, Wash.-based Providence St. Joseph also disclosed in the earnings report malpractice allegations against certain affiliates, although the “probable recoveries in these proceedings and the estimated costs and expenses of defense will be within applicable insurance limits or will not materially adversely affect the business or properties of the system,” the organization said.

The DOJ said in a statement that it does not confirm, deny or comment on investigations.

In 2014, HHS’ Office of Inspector General audited Swedish Health’s Swedish Medical Center–First Hill, an acute-care hospital in Seattle. It found that about two-thirds of 257 inpatient and outpatient claims from 2010 to 2012 did not fully comply with Medicare billing requirements, resulting in net overpayments of nearly $937,500.

Also, Swedish Health was accused in 2017 of asking neurosurgeons to increase patient volume and perform unnecessary surgeries.

The recent investigation involving Swedish may relate to a delicate balance providers must strike with their affiliates.

Health systems have been carefully navigating around the Stark law, which aims to curb Medicare and Medicaid spending by prohibiting physicians and hospitals from making referrals based on their financial self-interest. But the 1989 statutes conflict with outcome-oriented care, providers argue as the law dissuades them from incentive-based arrangements.

The Stark law offers little, if any, room for error and carries significant financial penalties, experts said. Maintaining compliance and abiding audits can drain resources.

Through six months of Providence St. Joseph Health’s 2019 fiscal year, it reported an operating income of $250 million on operating revenue of $12.6 billion, up from $30 million of operating income on $12 billion of operating revenue over the same period prior. The health system reported $41 million in restructuring costs, as it aims to streamline operations and boost productivity.

For 2018, the organization drew just $3 million in operating income last year on $24.4 billion in total operating revenue. Excluding asset impairment, severance and consulting costs related to restructuring, the system said its 2018 operating income would have been $165 million. The restructuring costs are being spread across 2018 and 2019.

As it restructures, Providence St. Joseph has been expanding its non-acute portfolio, forming a for-profit population health management company, launching its second, $150 million venture fund and buying a revenue-cycle management company based on blockchain technology.