Chicago Hospitals See Big Investment Returns

Investment returns helped bolster the incomes of Chicago-area hospitals in 2013, according to a report from Crain's Chicago Business.

Northwestern Memorial HealthCare in Chicago brought in $309.1 million in investment income, nearly matching its $312 million in operating income for the year ended Aug. 31, according to the report. Downers Grove, Ill.-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem also saw nine-figure gains of $196.6 million and $147.3 million, respectively.

The Standard & Poor's 500 index has gone down 3.6 percent this year, and investment strategists and money managers have predicted a 2014 gain of 6 percent, according to the report. Hospitals looking at those numbers shouldn't necessarily opt for riskier investments that promise better results, according to Adam Lynch, a vice president at Chicago-based Principle Valuation, a healthcare appraisal firm.

"You have to fight against thinking, 'We can operate at breakeven and make it up on investment income,'" he told Crain's.  "That's not always going to be there."

The Patient Protection and Affordable Care Act also fuel uncertainty, as the impact the health insurance exchanges will have on the bottom line for hospitals remains unclear, according to the report.

More Articles on Hospital Finances:
CFO Roundtable: How Will 3 Major Changes for the Year Ahead Impact Finances?  
Digging Into the CHS-HMA Deal: Glenview's $396M Payday
The Growing Bottom Line: 16 Statistics on Profits by Hospital Bed Count