Intermountain's bad debt jumps 41% in 2015

Salt Lake City-based Intermountain Healthcare saw its operating margin fall year over year, as bad debt and expenses increased.

The 22-hospital network reported an operating margin of 3.8 percent in 2015, down from a 5.5 percent margin a year earlier.

Like many other insurers, Intermountain's insurance arm, SelectHealth, incurred losses last year related to the risk corridor program under the Affordable Care Act.

The risk corridor program is designed to temporarily level the financial playing field for payers by limiting both unexpectedly high gains and losses associated with participating in a new insurance market. Insurers that saw greater profits paid into a pool to compensate insurers with higher losses. The three-year program, which runs through 2016, fell short by more than $2.5 billion in its first year because so many insurers experienced losses in the individual market.

Intermountain said it has incurred losses of $392.5 million tied to the risk corridor program for 2014 and 2015. As of Dec. 31, Intermountain had only collected $11.9 million in risk corridor payments.

"Management intends to aggressively pursue all available means to collect any risk corridor receivables that it believes are fully valid under existing law," said Intermountain officials.  

Intermountain saw revenue rise to nearly $6.1 billion in 2015, up 9.6 percent from 2014. Although the system benefitted from growth in patient service revenue and revenues attributable to SelectHealth last year, it was challenged by an increase in bad debt. Intermountain said bad debt increased 41 percent year over year to $215.3 million in 2015.

The health system's revenue gains were partially offset by an 11.4 percent year-over-year increase in expenses. Intermountain recorded $5.5 billion in expenses in 2015.

The system ended 2015 with net income of $279.1 million, down 35.2 percent from the year prior.

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