Edward-Elmhurst Health, a three-hospital system based in Naperville, Ill., saw revenues increase in fiscal year 2017 but ended the period with significantly less operating income than in the year prior.
The system reported revenues of $1.37 billion in fiscal year 2017, which ended June 30, up from revenues of $1.25 billion in fiscal year 2016, according to recently released bondholder documents.
However, rising expenses offset the system's revenue gains. Edward-Elmhurst's expenses rose 11.4 percent year over year to $1.37 billion in the most recent fiscal year. That growth was partially attributable to higher supplies costs, which increased 20.7 percent year over year. The system's expenses related to salaries and wages were $545.23 million in fiscal year 2017, nearly 8 percent higher than in the year prior.
Edward-Elmhurst ended fiscal year 2017 with operating income of $1.75 million, down 90.1 percent from $17.69 million in fiscal year 2016.
"Higher expenses and an increased number of Medicare and Medicaid patients were the primary causes of Edward-Elmhurst Health's fiscal year 2017 results," a system spokesperson told Becker's Hospital Review. "Strong patient volumes were also offset by an increase in bad debt due to patients' inability to pay higher co-pays and deductibles, and sharp increases in pharmaceutical and medical supply costs."
To improve its financial picture, the system plans to lay off 84 employees and leave 150 other positions unfilled. "While our volumes remain strong, we are paid less for every patient we see," wrote Edward-Elmhurst CEO Mary L. Mastro in an Oct. 4 memo to employees, obtained by Crain's Chicago Business. "Our expenses are growing faster than reimbursement from Medicare, Medicaid and commercial insurance companies, and our operating income in fiscal year 2017 was the lowest since our merger."
After factoring in nonoperating gains, the system reported net income of $92.62 million in the most recent fiscal year, compared to a net loss of $17.06 million in the year prior.
More articles on healthcare finance:
7 hospitals with strong finances
Nurses at California hospital walk off the job after not being paid
Tennessee hospital closes after falling 94% short of GoFundMe goal