St. Vincent Health System posted a $3.4 million surplus for the fiscal year ending June 30, 2012, according to figures released by the nonprofit this week to the Arkansas Democrat-Gazette.
That is the first surplus for the Little Rock-based nonprofit in five years. In the previous four years, it reported a total loss of $67 million.
St. Vincent is in talks with the University of Arkansas for Medical Sciences for a joint operation that an independent study says could save up to $63 million a year for both institutions.
Revenue from operations for fiscal 2012 jumped $38 million from the previous year, driven in part by the partnership with Heart Clinic Arkansas, said Peter Banko, president and chief executive officer of St. Vincent.
The 29 cardiologists came on board in January 2012, Banko said. Capital improvements also began to pay off in terms of patient volume, he said.
Of the deficit of $67 million incurred from fiscal 2008 through 2011, Banko said that since St. Vincent is part of the Denver-based Catholic Health Initiatives, which had $12 billion in revenue in fiscal 2012, the “blips” in places such as Little Rock can be absorbed.
“When you are a standalone and you have those kinds of losses it becomes catastrophic in some cases. When you’re part of a larger organization, they are able to view those as investments in then future of the market. We’re able to weather those kinds of negatives a lot better,” Banko said.
Catholic Health Initiatives had a 3 percent operating margin in the most recent fiscal year, a cushion that he described as “fairly solid” and representative of the past decade. The parent organization has a AA- credit rating by both Standard & Poor’s and Moody’s, he said, and last year refinanced $1.5 billion in debt. Cash on hand stood at about $6 billion, he said.
A study by Deloitte Consulting released in early March projected total annual savings for St. Vincent and UAMS ranging from $38 million to $67 million. Banko said he did not think the report broke down the savings between the institutions.
Banko confirmed that the financial data used in the Deloitte report was from the same data released to the Democrat-Gazette this week. All of that data had been redacted, or blacked out, before the report was released to the news media.
Additionally, the report contained much “granular,” or very detailed information - “a ton of stuff ” - that was redacted, including data of a proprietary nature that needs to be protected from a competitor, such as Baptist Health.
Hospitals face a “challenging reimbursement environment” because of cuts in governmental programs during the national health-care overhaul brought on by the Affordable Care and Patient Protection Act of 2010, he said.
“We’re having discussions with the university because the trajectories for both of us doesn’t look good,” he said. A partnership would yield a 5 percent to 6 percent savings for both institutions, he said.
Dan Rahn, chancellor of UAMS, told employees in an e-mail message on Wednesday that “we and SVHS hope to answer remaining questions and make a decision by mid-April as to whether or not we will proceed toward a formal affiliation.”
The board of the University of Arkansas at Fayetteville will hold a retreat Tuesday with UAMS officials at the Winthrop Rockefeller Institute Conference Center on Petit Jean Mountain to discuss the possible partnership.
Business, Pages 27 on 03/16/2013