CHI finishes FY18 with income boost despite admissions slip
- Catholic Health Initiatives (CHI) has reported an operating income gain of $317 million for fiscal year 2018, a 53% increase over the previous year.
- The Englewood, Colorado-based nonprofit health system said net income for the fiscal year ending June 30 was up 1.4%, or $222 million, compared to a 0.7% increase ($110.9 million) for the year prior.
- Despite its income gains, CHI did have trouble with admissions in fiscal 2018. While physician visits for the health system increased 3.9% year over year, acute admissions dropped 3.4%, acute inpatient days decreased 3.0%, non-emergent outpatient visits fell 2.8% and outpatient surgeries were down 2.6%.
The 100-hospital health system played down its volume losses, attributing its own declines to "the same difficult overall environment other health systems across the country are facing." That's mostly true, as inpatient admissions have been steadily decreasing since 2009, according to a 2017 Journal of Hospital Medicine study.
A handful of CHI's competitors, however, experienced a somewhat surprising admissions rebound for the period ending June 30, in what can be summed up as a mixed bag of admissions results that analysts believe may be the industry adjusting to a new norm.
CHI says in the FY18 report it was able to mitigate the impact of its volume losses with "revenue cycle improvements and cost reductions." Dean Swindle, CHI's chief financial officer, said the organization "maintains a solid balance sheet" and is seeing "positive trends on a consolidated basis" across most of its markets.
On the acquisitions side, the health system is still working to complete its merger with San Francisco-based Dignity Health. The deal would create the largest nonprofit system in the country based on operating revenue at nearly $29 billion, but the transaction — which was agreed upon in December — still awaits regulatory approval. CHI expects the deal to close by the end of this calendar year.
The Catholic health system is also still trying to divest its health plan subsidiary, QualChoice Health, which sells Medicare Advantage and commercial plans to employers across six states. CHI has been making moves to grow QualChoice while it seeks a buyer, capitalizing on the MA boom by expanding into Washington state in 2019 and improving QualChoice's operations results. The health system has flipped QualChoice's EBIDA losses into gains, reporting a positive EBIDA of $8.6 million for QualChoice in 2018, amounting to a $94 million improvement over last two fiscal year periods.
CHI's fiscal 2018 earnings are a good sign for the health system in what has otherwise been considered a trying time for nonprofit hospitals. Moody's this year revised its outlook for the nonprofit sector from stable to negative, following on the heels of nonprofits having seen more credit downgrades in 2017. There are, however, beacons of light: Fitch Ratings recently called off its "Rating Watch" for nonprofit hospitals and health systems.
- Catholic Health Initiatives Catholic Health Initiatives Annual Report
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