Bon Secours sees operating margin shrink in first half of FY 2017

Baltimore-based Bon Secours Health System saw revenue rise in the first half of fiscal year 2017 but experienced a drop in its operating margin.

The system recorded operating income of $10.4 million in the first quarter of FY 2017, compared to operating income of $19.1 million in the same period of the year prior. Bon Secours ended the first quarter with an operating margin of 1.3 percent, down from an operating margin of 2.4 percent in the same period of FY 2016.

Bon Secours said its weak financials in the first quarter were attributable, in part, to the presidential election.

"The first quarter of fiscal year 2017 was challenged with the uncertainties of the presidential election, which increased the capital market volatility and disruption in the healthcare industry as patients, physicians, payers and providers prepared for a new administration in Washington, D.C., possible health exchange impacts as well as the pending physician payment changes with the Medicare Access & CHIP Reauthorization Act," said Bon Secours in bondholder documents.

The system said it saw improvements in capital markets and experienced lower volatility in physician practice patterns in the second quarter of FY 2017.

For the six months that ended Feb. 28, Bon Secours recorded operating revenues of $1.63 billion, up 2.7 percent from the same period of the year prior. The system said this growth was driven by an increase in ambulatory volumes and revenue cycle improvements.

After factoring in a 3.4 percent year-over-year increase in expenses, Bon Secours recorded operating income of $34.2 million in the first half of FY 2017, down from $44.7 million in the same period of FY 2016. In the first six months of FY 2017, the system's operating margin fell to 2.1 percent from 2.8 percent in the same period of the year prior. 

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