Scripps Health benefitted from patient volume growth in the second quarter of 2016, which ended March 31, but expenses associated with health IT as well as salary and benefit costs strained the San Diego-based system's finances, according to a recent earnings report.
Excluding the impact of California's provider fee program, Scripps reported operating revenue of $671.2 million in the second quarter of 2016, up 8.1 percent from $620.6 million the year prior. Scripps said the boost was primarily attributable to higher patient volumes.
Scripps' operating expenses were $663.5 million in the second quarter of this year compared to $613.9 million in the same period of 2015. The system's expenses related to wages and benefits as well as supplies jumped in the second quarter, increasing 7.4 percent and 10 percent year over year, respectively.
IT costs also strained the system's finances. Last April, the Scripps board of trustees approved a project to migrate the system's inpatient and ambulatory EHR and revenue cycle management systems to Epic. The Epic project is expected to cost $360.5 million over 10 years.
Scripps also spent nearly $19.9 million on software and hardware to make the switch to ICD-10.
Excluding the impact of California's provider fee program, the system ended the second quarter with operating income of $28.1 million, up from $26.9 million the year prior.
More articles on healthcare finance:
Sutter operating income falls 31% as EMR costs drive up expenses
Study: Hospitals that deliver superior patient experience see 50% higher margins
5 must-reads for hospital CFOs this week