While three health systems in Toledo, Ohio, are financially sound, their profits are slim, The Blade reports.
The publication recently did an analysis of 2015 financial records for ProMedica, Mercy Health and the University of Toledo Medical Center. The information was reviewed independently by Bowling Green State University finance instructor Michael Slates, who concluded the profits being made by the Toledo health systems are marginal.
Here are seven key points from the analysis.
1. The analysis shows that the three health systems are increasingly relying on money from sources other than inpatient services — such as outpatient procedures, people visiting their physician groups and nursing homes.
2. ProMedica and Mercy Health also are using large cash reserves and loans to finance some of their new buildings, renovate existing buildings and purchase new technology, according to the report.
3. The University of Toledo Medical Center, a smaller public university-owned health system, saw an operating margin of just 0.4 percent at the end of its 2015 fiscal year, which ended June 30, 2015. In UTMC's current fiscal year, which ends in about two weeks, the hospital is showing signs of a rebound, David Morlock told The Blade. At the end of March, its operating margin had increased to 1.6 percent due to a small increase in market share for the hospital and more patients visiting the physician groups owned by UTMC.
4. In 2015, the Toledo region of Mercy's parent company saw a 0.6 operating margin, and ProMedica a 0.42 percent operating margin. ProMedica's margin does not take into account revenue from its Paramount insurance companies. Mercy's parent company saw an operating margin of 2.07 percent, while ProMedica's operating margin with the Paramount companies was 2.60 percent.
5. In 2015, Mercy's parent company earned $4.3 billion in patient revenue. The Toledo region's portion of those earnings, which includes Ohio hospitals in Toledo, Tiffin, Defiance and Willard, was $989 million, according to the report. However, after adjusting for expenses, depreciation on major purchases, paying interest on loans, and paying taxes, Mercy reported a net loss of more than $6 million in the Toledo region. Matt Love, Mercy Health's senior vice president of finance for the northern region, attributed the negative numbers, in part, to Toledo region hospitals taking a big hit on its investments.
6. ProMedica ended 2015 with $2 billion in patient service revenue, up $21.6 million from the year prior. The system partially attributed the revenue boost to growth in outpatient procedures. When combined with revenue from the Paramount insurance companies, it brought in some $3.1 billion. Net income for the two entities combined was $123 million for 2015.
7. In 2016, ProMedica has offered 1,200 full-time employees early retirement packages in a strategic effort to reduce operational costs. Employees were offered buyouts across ProMedica's various facilities, including hospitals, physician offices, corporate offices and health plan offices, Benet Rupp, ProMedica human resources senior vice president, told the Toledo Blade. Physicians employed by ProMedica were not eligible for buyouts.
To be eligible, staff must be aged 55 years and older with at least 10 years of service, but the age and years of service must add up to 80, according to the Toledo Blade. Employees were given 45 days to consider the offer.
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