Beaumont Health, Michigan’s largest health organization, had operating revenues of $4.7 billion in 2019, a $43.3 million increase over the $4.66 billion reported the previous year. Net income increased to $390.2 million in 2019, a boost of $243.2 million over 2018 figures, according to financial results released Feb. 17 by the organization.
Net operating income for 2019 was $185.2 million (a 3.9 percent operating margin), which was a $55.4 million decrease from 2018’s result of $240.7 million (a 5.2 percent operating margin).
“Last year, our total operating expenses rose .5 percent, or $21.4 million, compared to 2018,” says John Kerndl, chief financial officer at Beaumont Health. “We continue to invest in our employees in an increasingly competitive job market. This investment was tempered by significant reductions in supply expense and some reductions in liability expense. Our team did a great job managing in an increasingly challenging environment.”
In 2019, Beaumont experienced year-over-year volume increases in inpatient discharges, emergency visits, and physician encounters, while volumes for observations and deliveries decreased compared to the same period last year. Surgeries slightly declined, .3 percent, compared to the previous year.
Non-operating gains in 2019 were $205 million compared to a non-operating loss of $93.6 million in 2018.
“The market continues to be favorable, adds Kerndl. “While we had strong investment results last year, we recognize potential future results might not be as favorable due to forces beyond our control.”
The company’s treasury indicators also remained strong, as cash and investments were $2.3 billion on Dec. 31, 2019 compared to $2 billion on Dec. 31, 2018. Unrestricted days cash on hand was 195.1 days at the end of 2019 compared to 163.4 days the previous year. Total debt on Dec. 31, 2019 was $1.52 billion, compared to the Dec. 31, 2018 balance of $1.57 billion.
“Although there are always external forces that can affect our financial performance, our organization is financially strong and moving forward,” says Kendl. “In 2020, we will continue to invest in our employees and focus on growth. Beaumont will also expand on our successful urgent care initiative and open additional locations to increase access to outpatient care.
“Three of our hospitals have achieved Magnet status, and our five other hospitals are on the path to achieve the prestigious nursing designation,” Kerndl says. “In late December 2019, we signed a definitive agreement to make Akron, Ohio-based Summa Health a subsidiary of Beaumont, which will allow us to serve patients beyond Michigan. We remain on track to close the transaction at the end of the first quarter.”
Kerndl says Beaumont remains committed to reducing the cost of health care. To do so, he says the health system will continue to leverage the success of its accountable care organization (ACO), which it says is the top-performing ACO in Michigan and the fifth best in the country, according to the Centers for Medicare and Medicaid Services. The ACO generated $45.1 million in gross savings for contract year 2018.