Fairview Health Services' annual net income more than doubles

Minneapolis-based Fairview Health Services saw its financial picture improve in 2017 following its acquisition of two health systems.

The 12-hospital nonprofit health system reported operating revenue of $5.3 billion for the year ended Dec. 31, 2017, up 20.9 percent from the year prior, according to recent unaudited bondholder documents. Fairview Health Services saw net patient revenue climb $817.8 million during that time, largely driven by its acquisitions of St. Paul, Minn.-based HealthEast System and Grand Rapids, Minn.-based Grand Itasca Clinic & Hospital. Fairview's HealthEast acquisition contributed $575.2 million in revenue, while the Grand Itasca deal contributed $88.5 million in revenue.

At the same time, Fairview saw net operating income fall nearly 25 percent to $98.5 million due to increased labor and supplies costs and unit cost increases outstripping reimbursement, among other factors. The lower operating income pulled down Fairview's operating margin to 1.9 percent in 2017 compared to 3.1 percent in 2016.

However, after accounting for nonoperating gains, Fairview more than doubled its net income to $456.9 million in 2017, compared to $221.2 million in the same period of 2016. Fairview said the year-over-year improvement reflected gains on acquisitions and higher investment performance.

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