In recent Connecticut report conducted by the state’s Office of Health Strategy, it found that nine out of the 16 health systems throughout the state finished the fiscal year 2017 operating in what is commonly referred to as ‘the black,’ or in other words with a profit. Compared to 2016 when the operating margin was -0.9%, finishing 2017 with a total margin of 4.1% is considered an improvement.
Essentially, to calculate this operating margin, it’s important to integrate the expenses and revenue throughout the industry as a whole. That includes expenses associated with running the health system and money it takes in, including from various funding sources which can include endowments, donations, and investments as well as payments from insurance companies.
One of the key factors, according to some analysts, was that these health companies have managed to maintain the investments already made to improve quality care and reduce costs. Physicians are certainly a key component to successful healthcare operations, but other services, including home care, certainly help to reduce certain operating expenses associated with short and long-term care.
According to the CT Mirror article, More than half of CT health care systems in the black in 2017, written by Mackenzie Rigg:
“The 150-plus-page report is crafted each year, using hospital audited financial statements, annual reports and other data submissions to the state. The report also includes detailed accounts of each hospital’s financial performance.
OHS officials explained two one-time situations that affected the margins of Vassar Health Connecticut, which used to be affiliated with Sharon Hospital, and the University of Connecticut Health Center.
Vassar Health reported about $27 million in non-operating revenue due to Sharon Hospital’s sale to HealthQuest. UConn Health Center received $322 million in state and capital appropriations, which also was reflected in the hospital’s non-operating revenues.”
Whether this information -the overarching improvement in operating expenses and fiscal responsibility- will translate into lower insurance premiums, health care costs, or even access to various services, including home health care is yet to be seen. While health care costs have perpetually been a major concern in Connecticut, some of this data in the report can be viewed as a positive step in the right direction.
Some hospital organizations fared far better than others, though, and the Office of Health Strategy will likely be digging in to find out what factors — management, demographics, geography, etc. — may have impacted one health organization’s success while another may have continued to struggle and remain in the red.