Although operating income at Inova Health System in Falls Church, Va., dropped 36 percent in its 2013 fiscal year, large investment gains almost doubled the system's total profit.
Operating profit fell from $205.7 million in 2012 to $131.8 million last year. However, Inova, which owns five acute-care hospitals and a children's hospital, recorded $662.5 million of total profit in 2013 — an 83 percent increase from $362.9 million in 2012. Most of that total involved investment gains that were reclassified into Inova's total nonoperating revenue side of the balance sheet.
Overall, Inova posted a 5.2 percent operating margin on $2.54 billion of revenue. Net patient service revenue actually fell in 2013 due to soft delivery and surgical volumes, but Inova's total revenue increased year-over-year thanks to its recently acquired Medicaid health plan.
Other key financial data Inova reported in FY 2013:
• Medicare electronic health record incentives totaled $13.3 million.
• Inova spent $95 million on the implementation of its Epic EHR and revenue cycle systems in 2013, compared with $49.4 million in 2012. As of Dec. 31, all of Inova's hospitals and most its ambulatory sites have gone live on both Epic platforms.
• The health system made $365 million in capital expenditures last year, most of which went to the renovation of Inova Fairfax Hospital in Falls Church.
• Inova offered a lump sum buyout to its retirees who received less than $500 per month through their pension. The strategy resulted in a one-time cost of $3.4 million.
• As of Dec. 31, Inova had almost 600 days cash on hand, similar to 2012.
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