Vanderbilt University Medical Center points to Epic rollout for 68% drop in operating income

Nashville, Tenn.-based Vanderbilt University Medical Center saw revenues increase in fiscal year 2018, but the hospital ended the period with lower operating income, according to recently released unaudited financial documents.

Here are five things to know about the hospital's most recent financial results:

1. VUMC reported operating revenues of $4.1 billion in the 12 months ended June 30, up from $3.9 billion in the same period a year earlier. The hospital said the financial boost was largely attributable to higher net patient service revenue, which climbed 3.4 percent year over year.

2. VUMC's operating expenses increased 8.3 percent year over year to $4 billion in fiscal year 2018. The hospital saw expenses across several categories rise, including a 7.2 percent year-over-year increase in expenses related to salaries, wages and benefits.

3. "The increase in salaries, wages and benefits is primarily due to increased staffing to meet additional demand associated with higher net patient service revenue, research contracts, along with training costs and post-live ramp up related to our EMR system implementation," VUMC said. Higher consulting and management fees related to the Epic EMR implementation and an increase in subcontract expenses related to increased grant and contract revenue also caused the hospital's expenses to rise.

4. VUMC ended fiscal year 2018 with operating income of $56.2 million, down 68.5 percent from $178.5 million in the same period a year earlier. The decline was largely attributable to the rollout of the new EMR system. VUMC said it had planned for future operating income reductions due to the implementation.

5. "We successfully completed our EMR implementation in November and we anticipate the new system will yield future efficiencies," VUMC said. "However, in the year of implementation, increased operating expenses related to implementation caused a reduction in operating income. The EMR implementation put pressure on clinical volumes in the post-live period. Although we have achieved net patient services revenue in excess of our budget, the implementation has muted procedural volumes."

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