Despite continued high labor expenses, inflation and the rising costs of medical equipment and supplies, some nonprofit health systems' margins made it back into the black in the first quarter.
March was the first time in 15 months that revenue growth outpaced expense increases, according to a report from Syntellis. The median hospital year-to-date operating margin in March was 0.4 percent, up from -1.1 percent in February.
Here are six nonprofit systems that drove operating margins back into the black in the first quarter:
1. Oakland, Calif.-based Kaiser Permanente reported $233 million in operating income for the first quarter, up from a $72 million operating loss in the same period 2022. Its operating margin grew from -0.3 percent in the first quarter of 2022 to 0.9 percent in the first quarter of this year. Net income for the first quarter was $1.2 billion compared to a net loss of $961 million last year.
2. St. Louis-based BJC HealthCare, a 14-hospital system, reported $59.5 million in operating income for the first quarter, compared with a net operating loss of $46.1 million one year ago. While revenues increased 16 percent, expenses rose 8.7 percent to total $1.66 billion. Overall income for the period was $180.8 million, up from a $91.2 million net loss last year.
3. Phoenix-based Banner Health, a 33-hospital system, transformed a $46 million operating loss in the first quarter of 2022 into a $128 million gain in the first quarter of this year. Operating expenses, though slightly higher than in 2022, were helped by a reduction in contract labor costs of $57 million, or 26 percent. Net income was $292 million for the first quarter compared with a $171 million loss in the same period of 2022.
4. Indianapolis-based IU Health reported operating income of $45.1 million for the first quarter compared to a loss of $29.8 million for the same period in 2022. After including the performance of its investment portfolio and other nonoperating items, the 16-hospital system recorded a bottom-line gain of $311.7 million in the first quarter, compared to a $358.5 million loss one year ago.
5. Cleveland Clinic posted $32.3 million in operating income for the three months ending March 31, compared with a loss of $104.5 million in the same period last year. As of March 31, its operating margin sits at 0.9 percent, up from -3.4 percent margin in the first quarter of 2022. Overall income for the 20-hospital system totaled $335.5 million compared with a loss of $282.5 million in the first quarter of 2022.
6. Neenah, Wis.-based ThedaCare reported $3.6 million in operating income for the first quarter, up from an operating loss in the same period of 2022 of $5 million. Overall, ThedaCare reported net income of $31.8 million compared with a $42.2 million loss in the first quarter of 2022. ThedaCare plans to merge with Milwaukee-based Froedtert Health by the end of the year, pending regulatory approvals.