Forsyth Medical Center (copy) (copy)

File photo — Novant Health’s Forsyth Medical Center in Winston-Salem.

David Rolfe/Journal/

Novant Health Inc. disclosed Monday its audited fiscal 2017 performance in which it had a 5 percent increase in excess revenue to $477.9 million.

Excess revenue over expenses in a not-for-profit organization, such as Novant, equates to profit in a for-profit business.

Novant’s report first listed its fiscal 2017 report Feb. 28 at the Municipal Securities Rulemaking Board’s website, The reports are aimed primarily at bondholders and ratings agencies, and typically are submitted about two months after the end of a quarter.

That report was issued without management comment.

Monday’s audited reported included that Novant provided $794.4 million in charity care, including $486.6 million in unpaid Medicare expenses and $107.1 million in unpaid Medicaid expenses, as well as other community benefits. That was up from $725.5 million in 2016.

Included in the 2017 community benefit total was $138.9 million in Novant financial assistance to patients.

The system reported $4.59 billion in core operating revenue, up 5.9 percent.

However, operating expenses jumped 10 percent to $4.11 billion.

When excluding investment income, Novant had a 35.6 percent decrease in core operating income to $174.4 million.

Investment income was listed at $307.8 million, compared with $151.1 million a year ago. Not-for-profit hospitals depend on investment income to increase their bottom lines and to help pay for capital investments.

Novant reported $276.1 million in “other income,” compared with $235.7 million a year ago.

In the Triad, Novant Health owns and manages Forsyth, Clemmons, Kernersville and Thomasville medical centers and Medical Park Hospital in Winston-Salem. The health-care system has 24,000 employees overall, including about 5,000 in the Triad.

Carl Armato, the system’s chief executive, said Novant provided $111.7 million in bonus income, saying “every eligible team member received a bonus.”

Novant spokeswoman Caryn Klebba said $27.4 million of the bonus funds went to “directors and above,’ while $84.3 million went to “all others.”

“In 2017, Novant Health continued to invest in its team members, staying true to our commitment of being world class for our people so they can be world class at caring for our patients,” Armato said.

“Additionally, Novant invested in opening access to quality health care in our communities by opening about one new clinic a week.”

Novant said it spent $286 million on capital investments in 2017, including the inpatient element of Clemmons Medical Center.

Novant’s provision for bad debt in the year was at $212.9 million, up from $204.5 million a year ago.

According to the American Hospital Association, bad debt is defined as services for which hospitals anticipate, but do not receive, payment from patients who have the financial means to pay.

For the fourth quarter, excess revenue was down 1.6 percent to $180.4 million.

Core operating revenue was up 6.2 percent to $1.24 billion.

Fred Hargett, Novant’s chief financial officer, said the system “continues to maintain a healthy balance sheet, which positions us strongly to be able to invest in our people and our communities, despite swings in health care utilization.”

“Stabilization of the (health care) market is needed, and we look forward to working with our elected officials in 2018 to help bring about that change.”

State legislators were told March 13 that North Carolina could learn within weeks whether it will gain Trump administration approval for its extensive Medicaid waiver reform request.

Dr. Mandy Cohen, the state’s health secretary, said at an oversight committee meeting that the application “is moving in the right direction” with the Centers for Medicare and Medicaid Services.

Cohen said she and Gov. Roy Cooper have met with recently appointed federal health Secretary Alex Azar about the waiver. State health officials have been in weekly contact with CMS since September.

A Jan. 11 ruling from CMS affected the federal Medicaid waiver request submitted by the McCrory administration in June 2016 and amended Nov. 20 by the Cooper administration.

The ruling allows 10 states, including North Carolina, to institute a work requirement for some Medicaid recipients to maintain their eligibility. Indiana and Kentucky have taken that step.

“We are one of the few states in that category with a comprehensive Medicaid waiver application,” Cohen said. ”The other states that have had their waiver approved pursued a very narrow slice with the work requirement.”

Medicaid enrollment has climbed from 1.75 million in July 2014 to a projected 2.14 million on June 30, according to a N.C. Department of Health and Human Services report.

The increase was spurred in large part by applicants for the federal health insurance exchange being determined as being eligible for Medicaid coverage.

Another 500,000 North Carolinians could become eligible with Medicaid expansion tied to federal funding initiatives.

However, key Republican legislative leaders continue to oppose expansion, some calling it a non-starter, because of concerns that CMS would not keep a pledge to pay 90 percent of the administrative costs for expansion.

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