SSM Health Care Lost $74M in 2013

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Despite higher admissions and improved revenue, St. Louis-based SSM Health Care lost more than $74.3 million from operations in fiscal year 2013.

SSMHealthCareSSM executives attributed the sizable losses to several factors, most of which were one-time expenses. The largest of those factors was SSM's "longstanding dispute with CMS" over adolescent psychiatric days. CMS ruled against SSM and its Oklahoma division, which included adolescent psychiatric days in the disproportionate share formula on Medicare cost reports from 2004 to 2012. SSM said it made an adjustment for that ruling, resulting in $61.2 million in losses. The move also reduced SSM's Medicare revenue by $5.6 million last year.

Kris Zimmer, senior vice president of finance and treasurer of SSM, also said in the report the system's acquisition of Audrain Medical Center in Mexico, Mo., resulted in a $6.7 million impairment loss. SSM closed on its acquisition of Audrain, an 88-bed hospital now known as SSM Audrain Health Care, last March.

Even accounting for the nonrecurring losses, SSM executives said the health system still faced many operating challenges such as volumes shifting from inpatient to outpatient, Medicare reimbursement reductions due to sequestration, RAC audits and its conversion to Epic's patient accounting system. Two weeks ago, Standard & Poor's Ratings Services downgraded SSM's bond rating to "A+" from "AA-" due to those challenges.

However, Mr. Zimmer and the management team said they have developed a strategic plan for 2014 with a goal of reaching $111 million in operating income, or at least a 2 percent operating margin.

Overall, SSM's revenue in 2013 climbed 14.7 percent to more than $3.81 billion. Much of the increase came from SSM's health plan premiums. Admissions rose 1.3 percent, while patient days were up 1.5 percent. SSM still recorded a total profit of $126.7 million, compared with $206.3 million, as investment gains salvaged the year.

SSM operates 18 hospitals with 3,531 staffed beds in four states. The system also includes 60 outpatient centers, an insurance plan, two nursing homes and a pharmacy benefit company. Last September, SSM finalized its merger with Dean Health Systems, a physician-owned system in Madison, Wis.

More Articles on Health System Finance:
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Losses at West Penn Allegheny Topped $370M in 2013
LifePoint Scores Boosts in Q1 Profit, Revenue

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