Dive Brief:
- Advocate Aurora Health released its year-end financial report on Thursday showing the newly combined company earned $12.2 billion in total revenue in 2018, up 3.5% from $11.7 billion in the year prior. Operating income dropped to $472.4 million in 2018 from $554.7 million in 2017.
- Expenses rose as well in 2018, an increase of 4.2% to $11.6 billion compared to 2017. But volume was a strong point for the nonprofit health system as outpatient visits increased 4.7%, home visits rose 6% and physician visits rose 3%. Overall, discharges at Advocate Aurora fell just under 1%.
- The nonprofit health system, based out of Downers Grove, Illinois, and Milwaukee, merged in April 2018. Advocate Aurora owns and operates 25 acute hospitals between the two states, as well as a children's hospital and a psychiatric hospital.
Dive Insight:
Operating income at Advocate Aurora is still recovering from the 20% hit it took during the first six months of 2018, a decrease reportedly related to added costs connected the merger and a new EHR.
But volume is on the rise at the health system as it continues its focus on outpatient visits. With the ongoing shift to value-based care, payers and providers have been teaming up to push care out of low-reimbursement inpatient settings and into better-compensated outpatient units when possible.
Nonprofit hospitals are facing the same pressures as their for-profit counterparts, with shrinking inpatient volumes, tighter federal reimbursements and increasing costs of care. A new report from Fitch claims that while headwinds facing nonprofit hospitals are still strong, they may start to gain some ground in 2019, which will see a continually shrinking payer mix and a rapidly-aging population bringing in low Medicare payments rather than patients covered by higher-paying commercial plans.
Still, Advocate Aurora has big plans to meet some pricey progressive goals. The health system intends to power all of its healthcare operations with renewable electricity by 2030, it said Wednesday.
Late last year, Advocate Aurora announced it will be increasing its minimum wage to $15 an hour by early 2021. The system said it plans to make the wage increases incrementally, reaching $13 an hour in the middle of 2019 and $14 in early 2020. About 72,000 people are employed by the health system.
Salaries, wages and benefits increased 4.3% in 2018 to $274.3 million compared to the same period in the prior year, due to an "increase in staffing related to increased outpatient and physician visits and inflationary rate increases in wages."
The Advocate-Aurora deal in April was the largest that region had seen, and the system is only getting bigger.
As of the year's end, the system had more than $306.5 million in construction in progress, including the $250 million it announced last year spent building a medical center in Mount Pleasant, Wisconsin. According to its financial report, Advocate Aurora expects to finish construction on that project sometime in 2021, but a spokesperson for the health systems said the date will actually likely be early 2022.
The 2018 consolidated financial statement details the results of the quarter ended Dec. 31.
Correction: A previous version of this article had the wrong dollar amounts for salaries, wages and benefits and for construction in progress.