Dive Brief:
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Summa Health saw a $43 million financial turnaround in the first half of 2018 after a $33 million operating loss in the same period last year, according to its quarterly financial report.
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Cliff Deveny, who has served as interim CEO since last year, told Crain's Cleveland Business there wasn't one primary reason for the turnaround. Instead, the improvement came from a system-wide effort to lower costs and improve access, including expanded hours and moving to a new headquarters. The HQ move alone will save $1.5 million annually.
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The Akron, Ohio-based health system also cut about 300 mostly administrative positions, dropped services, consolidated units and reviewed capital needs. Since the layoffs, the system has hired about 1,000 people, mainly on the clinical side, according to Crain's.
Dive Insight:
Summa Health, which calls itself "a patient-centered population health management organization," is now in the black. It achieved this by making tough decisions like cutting positions, refocusing services and reinvesting in the clinical side. Operating income for the first half was close to $9.6 million, which was more than $2.1 million over what the system budgeted.
One key takeaway from Q2 financial results was that hospitals need to adapt to survive difficult headwinds. Multiple factors are working against hospitals, including lower reimbursements, payers pushing to move more care to outpatient facilities and fewer inpatient stays.
Summa enjoyed better than expected patient revenues. Net patient service revenue less bad debts finished the first half at more than $435 million, which was nearly $10 million more than the system expected. Overall, the company saw about $10 million more revenue than predicted for the first half.
The system's expenses were also higher than expected. That increase was driven by $11 million more in salaries and wages. However, that amount was almost matched in cuts to contracts and professional fees.