Banner Health takes hit on investments, operating margin dips

Phoenix-based nonprofit Banner Health posted a $263.3 million operating surplus on $5.4 billion in revenue for the year ended Dec. 31, 2014, compared to an operating surplus of $254.1 million on $5.1 billion in revenue the year prior.

The system's operating margin for 2014 was 4.9 percent, down slightly from 5 percent in 2013.

Banner noted that 22.3 percent of its net patient service revenue was derived from Medicare in 2014, up from 21.2 percent in 2013. The percentage of the system's patient service revenue coming from Medicaid also increased to 11.5 percent, up from 9.1 percent the year prior.

The system's expenses grew to $5.1 billion in 2014, up from $4.8 billion in 2013. Banner's supply costs increased from $799 million in 2013 to $863.8 million in 2014.

Like many other systems, including Downers Grove, Ill.-based Advocate Health Care and Danville, Pa.-based Geisinger Health System, Banner's investments took a hit in 2014.

Banner's excess of revenue over expenses fell to $258.3 million for 2014, down from $833.3 million the year prior.

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