UMass Memorial points to Epic implementation for drop in operating income

Worchester, Mass.-based UMass Memorial Health Care saw revenue increase in fiscal year 2016, but the system said costs associated with implementing an Epic EHR system dragged down operating income.

UMass Memorial recorded revenue of $2.4 billion in FY 2016, up 5.8 percent from the year prior. The financial boost was largely attributable to a 6 percent year-over-year increase in patient service revenue, which grew to $2.3 billion in FY 2016, according to recently released bondholder documents.

The system ended the most recent fiscal year with operating income of $40.7 million, down from $72.2 million in FY 2015. The decline was largely attributable to $25 million in training and implementation costs associated with its new Epic EHR platform.

UMass Memorial officials announced plans to adopt Epic's EHR system in 2015. The project is expected to cost $700 million over a 10-year period.

UMass Memorial CFO Sergio Melgar told the Boston Business Journal the system expects Epic training costs to be about $50 million in FY 2017, but "most of the impact will be in fiscal 2018 in the beginning [of the year]." UMass Memorial plans to go live on the new system in October, according to the report.

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