Cone Health managed to post a slight increase in excess revenue for its first half of fiscal 2019-20 in spite of the opening waves of the COVID-19 pandemic.
The state’s not-for-profit health care systems have experienced two main COVID-19 blows: a six-week pause on performing non-essential elective surgeries; and additional expenses for treating patients with the virus.
“With the regulatory restrictions, stay at home orders and closure of business, the health network experienced significantly lower patient volumes, especially in elective surgeries, outpatient ancillary services and physician office visits,” Cone said in the report.
“The system also incurred significant costs associated with personal protection equipment used in managing the COVID-19 outbreak.
“Management continues to analyze the impact of this crisis and is working with all governmental agencies for financial assistance and relief.”
Excess revenue increased by 2.3% to $26.18 million.
For a not-for-profit organization, excess revenue is equivalent to profit in a for-profit organization.
In recent quarters, Cone has become the first of the Triad’s three main health care systems to disclose quarterly financial reports.
The results are posted on the Municipal Securities Rulemaking Board’s website, www.emma.msrb.org. Emma reports are aimed primarily at bondholders and ratings agencies, and are typically released about two months after the end of a quarter.
Cone, like most of the state’s major health care systems, halted non-essential elective surgeries in mid-March. Cone resumed some of those surgeries May 11 under a phased approach, spokesman Doug Allred said
Core patient revenue was up 8.3% to $1.04 million, based in part on a 1.4% increase in outpatient visits to 470,552 and a 2.1% uptick in emergency department visits of 176,170.
By comparison, surgical procedures slipped 1.5% to 20,503.
It had “premium” revenue of $75.61 million paid to the system’s Medicare Advantage plan, up 8%. Other operating revenue rose 4.9% to $33.28 million.
Overall expenses rose just under 9% to $1.13 billion, including a 10% increase in salaries and wages to $416.24 million. The system raised its minimum hourly wage from $12 to $13 in February 2019.
Supplier costs jumped 13.4% to $227.59 million, related mostly to “growth in drugs for specialty, contract and Cancer Center pharmacies, and by growth in supplies for surgeries and procedural volumes.”
The system reported a 37.2% decline in investment income to $7.31 million. Not-for-profit hospitals depend on investment income to increase their bottom lines and to help pay for capital improvements.
The Cone system has five hospitals, 1,231 licensed beds and more than 12,000 employees.
Medicare and Medicaid represented 46.7% of reimbursement and source of payments, while commercial and managed care was 45.4% and self-pay was 1.4%.