Downers Grove, Ill.-based Advocate Health Care recorded operating income of $47.4 million in the second quarter of fiscal year 2017, down 41.8 percent compared to $81.5 million in the same period a year prior.
The nonprofit, 12-hospital system primarily attributed the decline to integration of the system's physician arm, Advocate Physicians Partners, into Advocate's financial statement. Advocate also pointed to higher operating costs in relation to salary and wages and pharmaceutical expenses as reason for the decrease, according to unaudited financial documents.
Advocate reported a 10.6 percent year-over-year increase in total expenses for the second quarter ended June 30, totaling $1.48 billion. The hike reflects APP finances, inflationary increases and an uptick in supply costs.
At the same time, Advocate generated revenues of $1.52 billion, a 7.6 percent year-over-year increase from $1.42 billion. While the system's patient service revenue decreased 7.1 percent to $1.11 billion in the second quarter of 2017 compared to the same period last year, this was partially offset by higher medical group visits, modest rate increases and an increase in patient acuity.
Accounting for expenses, Advocate's net income fell 28.4 percent in the second quarter of this year to $170.9 million. The decrease represented lower operating income and investment returns.
In May, Advocate unveiled a cost-cutting plan to protect its future financial performance, with $200 million in cuts expected.
Editor's note: This article was updated Aug. 31 at 9:31 a.m.
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