Scripps net income takes huge hit despite strong revenue growth
- Scripps Health reported strong growth in both operating revenue and operating income during the third quarter of fiscal year 2018, but net income plunged more than 75% due to shrinking investment income.
- The San Diego-based nonprofit's operating revenue totaled $727.1 million, up from $659.7 million in Q3 2017, fueled by gains in patient volumes, outpatient visits and larger provider fee revenue, according to unaudited financial documents. Operating income climbed to $11.5 million, from $5.6 million in the same period a year ago.
- But the rise in provider fees also helped drive up Scripps' operating expenses, which grew 9.2% to $2.2 billion, from about $2 billion last year.
Meanwhile, realized and unrealized investment income fell by $7.8 million and $54.7 million, respectively.
The result was a 77.4% year-over-year drop in net income — from $70 million to $15.8 million in the most recent three-month period.
Many factors are eating away at hospitals' bottom lines. Hospital operating costs are rising, patient admissions are in decline and medical cost increases are outpacing wage growth while patients are facing higher deductibles.
To make ends meet, healthcare organizations are looking at a range of cost-cutting options, from workforce management and laying off staff to mergers and acquisitions.
In January, Scripps CEO Chris Van Gorder informed employees that the health system would seek to lower costs in part by shifting more patients from its five hospitals to outpatient care. The reorganization also included an unspecified number of layoffs.
Van Gorder said the move was necessary to remain competitive amid declining reimbursements, higher patient deductibles and the overall trend toward healthcare consumerism.