University of California system boosts surplus thanks to higher volume, rates

By Beth Kutscher

The University of California medical centers, which include the state’s five public teaching hospitals, more than doubled their combined operating surplus on higher patient volume and payment rates in their fiscal 2014, according to their latest financial report.

The group includes three campuses in the Los Angeles area; two campuses in and near San Francisco, one of which is a children’s hospital; and hospitals in Davis, Irvine and San Diego.

Across the system, discharges increased 1.7% while outpatient visits increased 3.8%.

Those numbers contributed to an operating surplus of $507.4 million on $8.6 billion in operating revenue for fiscal 2014, which ended June 30. In comparison, the system’s operating surplus was $221.1 million on $8 billion in revenue in the prior fiscal year.

All of the UC hospitals, with the exception of Children’s Hospital & Research Center Oakland, reported higher revenue year over year. Children’s Hospital was most affected by the loss of revenue from the state’s provider-fee program, which is awaiting approval from the CMS. The program benefits hospitals that see a high number of low-income patients.

But a combination of higher volume, higher contracted rates from insurers, and patients with higher acuity conditions helped buoy revenue at the remaining campuses.

The system’s expenses also increased 3.7%, primarily as a result of higher salary and benefit costs as well as rising supply costs. Its pension obligations did get some relief from larger gains on its investments.

[Source]: Modern Healthcare