Northwell operating margin more than triples to 1.8%

New Hyde Park, N.Y.-based Northwell Health posted an operating income of $146.6 million (1.8 percent margin) in the six months ended June 30, up from $40.8 million (0.5 percent margin) during the same period last year, according to financial documents published Aug. 29. 

During the six-month period, operating revenue grew by $794.5 million — 10.6 percent year over year — while operating expenses increased $688.6 million, 9.2 percent year over year. 

The 21-hospital system attributes the jump in revenue growth to increases in volume, payment rates, pharmacy sales and the growth of its ambulatory and physician network. Revenue cycle initiatives also contributed to operating revenue growth. 

Volume has continued to grow since the COVID-19 surge in early 2022, and for many services it is currently at or above pre-COVID-19 levels, Northwell said in its second-quarter financial report. Also included in operating revenue for the six months ended June 30, 2023 and 2022 was $102 million and $54.5 million, respectively, of COVID-19 relief funding. 

Expenses for the six months ended June 30 increased 9.2 percent year over year to $8.2 billion. Within that, salaries increased 9.2 percent year over year to $4.3 billion and employee benefits rose 9 percent to $949.8 million. 

Northwell attributed the spike in expenses to cost of living wage adjustments, the effect of inflation on supply and expense price trends, and investments in several areas including IT services, ambulatory and physician network expansion, infrastructure and quality initiatives. 

After factoring in nonoperating items, Northwell posted a net income of $606.3 million for the six months ended June 30, 2023, compared with a net loss of $1 billion in the prior-year period.


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