Scripps Health, based in San Diego, saw its operating margin fall to 7 percent in the quarter ended Dec. 31, 2014, down from 7.4 percent in the comparable quarter of the previous year.
The system reported $707.6 million in operating revenues in the first quarter of its fiscal 2015, up from $627.9 million in the same period of the prior year.
The boost in revenue was attributable largely to California resuming its provider fee program, which issues supplemental payments to hospitals that treat a substantial number of Medicaid patients. The system's provider fee revenues increased to $77.7 million in the quarter ended Dec. 31, 2014, up from $21 million in the same period of the prior year.
However, higher costs caused its operating margin to decline. The four-hospital system experienced an increase in costs associated with wages and benefits, and a significant change in provider fee program costs, with those expenses rising to $65.4 million in the first quarter, up from $14.8 million in the same period of the preceding year.
Its operating income for the first quarter of fiscal 2015 was $49.5 million, up from $46.5 million for the same period of the prior year.
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