Banner Health finances stable despite losses on newly acquired hospitals

Banner Health ended the first quarter of 2016 with an operating margin on par with last year's, but losses mounted at the Phoenix-based system's newly acquired hospitals in the first quarter.

Banner reported operating income of $106.5 million on $1.9 billion in revenue for the first quarter of 2016. That's compared to operating income of $85.8 million on nearly $1.6 billion in total revenue during the same period of 2015.

The system's stable performance is partially attributable to an uptick in outpatient visits, emergency room visits and surgical procedures at its legacy hospitals.

Hospitals that Banner acquired or opened in 2015 struggled in the first quarter. These facilities include Banner Fort Collins (Colo.) Medical Center, which opened last April, Banner Payson (Ariz.) Medical Center, which the system acquired in August 2015, and Tucson-based University of Arizona Health Network, which Banner acquired last February. The system's new hospitals generated operating losses of $32.5 million in the first quarter compared with a $5.5 million loss in the same period of 2015.

Banner's accountable care organization, Banner Health Network, recorded an operating loss of $14.4 million in the first quarter, which is greater than the loss of $2.5 million it reported in the same quarter of last year.

Even with the challenges, Banner reported an operating margin of 5.5 percent in the first quarter, compared to a 5.4 percent operating margin in the same period of the year prior.

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