Lower investment income and other non-core revenue decreases contributed to Wake Forest Baptist Medical Center reporting Tuesday a 66.4% decline in excess revenue to $34.3 million for the first quarter of fiscal 2019-20.
In a not-for-profit organization, “excess revenue” is analogous to “profit” in a for-profit organization.
The first quarter of 2018-19 was the first that included revenue and expenses from High Point Regional Hospital, which Wake Forest Baptist purchased in September 2018.
Wake Forest Baptist has 19,220 employees overall. It is the largest employer in Forsyth County at 14,271 as of October 2018, according to the Winston-Salem Chamber of Commerce's list of top-30 employers in the county.
The biggest factor in the year-over-year excess revenue decline is having no contribution from business contributions after having $22.2 million in the first quarter of 2018-19.
Wake Forest Baptist defines those contributions to include “unconditional promises to give.” Those contributions are recognized as revenue in the period received.
The other major factor was having just under $4 million in net investment gains in the quarter, compared with a gain of just under $14 million a year ago. Not-for-profit hospitals depend on investment income to increase their bottom lines and to help pay for capital investments.
When it comes to core revenue for the first quarter, Wake Forest Baptist was up 16.2% to $897.8 million.
Foremost was $789.7 million in net patient-services revenue, a 16.3% increase.
The breakdown by Wake Forest Baptist-affiliated medical facilities was: $4669 million from N.C. Baptist Hospital; $296.2 million from Wake Forest University Health Sciences; $86.1 million from High Point Medical Center; $30.7 million from Lexington Medical Center; $19.4 million from Davie Medical Center; and $17.3 million from Wilkes Regional Medical Center.
Gifts, grants and contracts were at $47.9 million, up 4.7%. There also were: $26.2 million from “other sources” that feature federal incentive payments for implementing electronic health records; $17.8 million in net assets released from restrictions; and $10.1 million from net student tuition and fees.
Operating expenses climbed 15.4% to $889.9 million. Salaries and wages rose 14% to $397.5 million; and the cost of clinical supplies and equipment increased 18.2% to $172.8 million.
Wake Forest Baptist no longer breaks out its provision for bad debts, which totaled $212.8 million in fiscal 2017-18. The provision has a bottom-line effect on the system’s excess revenue.
According to the American Hospital Association, bad debt is defined as services for which hospitals anticipate but don’t receive payment from patients who have the financial means to pay.
The system reported: a 32.1% increase year over year in outpatient operating-room cases to 8,895; a 37.2% jump in emergency-department visits to 52,202; and a 45.4% increase in inpatient admissions to 16,029.
Wake Forest Baptist issued the quarterly report on the Municipal Securities Rulemaking Board’s website, www.emma.msrb.org.
The Emma reports are aimed primarily at bondholders and ratings agencies, and typically are submitted about two months after the quarter ended.