Newly wed Bon Secours Mercy Health posts income drop 4 months in
- Newly-merged Bon Secours Mercy Health reported financials this week highlighting the last four months of fiscal 2018. The health systems finalized their merger in September, becoming the fifth largest Catholic system in the country.
- Announcing plans to join forces in February 2018 to compete up the East Coast from St. Petersburg to the Hudson River, leadership said the combined company hopes to generate $8 billion in net operating revenue and $293 million in operating income during its first year. Within the first four months, Bon Secours Mercy Health's combined net operating revenue totaled about $2.7 billion.
- Operating income for the four month period fell from a pro-forma $72.9 million in 2017 to $58.8 million in 2018. Company chiefs mainly attributed the difference to declines in the global equity market during the fourth quarter of the fiscal year. As for the hit to operating income, Bon Secours Mercy Health executives pointed to costly pharmaceuticals and supplies, increased inpatient surgical volume and employment expenses.
According to the management discussion portion of the report, the consolidated results assume operational standards and cultural differences had been smoothed out by September's merge and remained consistent until December.
The health system has 45,700 full-time employees spread across 43 hospitals. Two acquisitions and three joint ventures are also reportedly in the works, worth $520 billion in assets, according to the report.
What the report didn't address is how Bon Secours Mercy will cultivate a harmonized company culture. The two merged entities operate in service areas that hardly intersect, with 43 hospitals spanning seven states, from Florida to New York.
Employment expenses increased $29.9 million in the first four months of fiscal 2018 compared to the pro-forma figures reported for the same period last year. The report authors attribute the additional costs to "inflationary increases" that took place in 2018.
The company announced this week it will be laying off 60 employees in North Carolina in early May and closing a primary care facility that treats about 2,000 patients. According to a recent healthcare workforce report from Jefferies, layoffs in the sector were up in March for the second consecutive month.
Bon Secours is planning to compete with its consolidation-hungry peers like mega-company Catholic Health Initiatives and Dignity Health, which pack nearly 140 hospitals between them.
- Bon Secours Mercy Health Bon Secours Mercy Health Consolidated Financial Statements for Four Months Ended December 31, 2018
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