Stock market portfolio lifts Cone to $103M in excess revenue

Excess revenue over expenses in a not-for-profit organization, such as Cone, equates to profit in a for-profit business. Cone’s fiscal year ends on Sept. 30.

Through the same period in fiscal 2021-22, Cone reported a $179.3 million loss.

The Greensboro health care system reported Friday having $106.3 million in investment income for the fiscal year, compared with a loss of $97.2 million in the same period a year ago.

Not-for-profit health care systems, such as Atrium Health, Atrium Health Wake Forest Baptist, Cone Health and Novant Health Inc., depend on investment income to increase their bottom lines.

When excluding the investment income component, Cone had $17.6 million in core income, up from a loss of $57.7 million a year ago.

Operating revenue was up 6.1% to $2.71 billion.

That broke down to: 7.71% increase in net patient service revenue to just under $2.4 billion; a 15.1% jump in what it calls “premium” revenue to $198.5 million; and a 27.8% decline in other operating revenue to $107.6 million.

Overall expenses were up 3.1% to $2.69 billion.

Salaries and wages increased by 5.8% to $985.1 million. The system’s minimum wage was raised on Jan. 31, 2021, from $13 to $15 an hour.

Fringe benefits climbed 5.3% to $313.3 million, while supplies expenses jumped 8.8% to $574.1 million. Cone spent $74.1 million on “purchased (contract) personnel,” — mostly additional travel nurses — compared with $122.7 million a year ago.

Cone reported a 10.1% increase to 369,452 in systemwide emergency department visits, as well as a 13.9% jump in outpatient visits to 1.22 million, a 27.4% decrease in telehealth visits to 36,544, and 3.2% increase in surgical procedures to 41,671.

The report was posted on the Municipal Securities Rulemaking Board’s website, www.emma.msrb.org. Healthcare systems’ quarterly financial reports are aimed primarily at bondholders and ratings agencies.

Cone Health has more than 13,000 employees systemwide and five hospitals.

“Similar to health systems across the country, Cone Health continued to experience financial challenges from aftereffects of the COVID‐19 pandemic, particularly in labor costs overall expense inflation,” Cone said in the filing. “At the same time, government payments from the (federal) CARES Act and other sources that were received during the public health emergency have decreased.

“Management’s response to the system’s financial challenges included revenue and expense improvement tactics that resulted in a significant improvement in operating income from fiscal year 2022 to fiscal year 2023.”

Cone provided commentary on the potential impact of Medicaid expansion on the system in which the N.C. Department of Health and Human Services begins rolling out on Dec. 1.

Up to 300,000 North Carolinians began being contacted Nov. 6 about their Medicaid expansion eligibility by DHHS. Those individuals are enrolled in the state Medicaid’s limited Family Planning program and are eligible for full Medicaid benefits starting Dec. 1.

Medicaid expansion is expected to bring coverage to a total of more than 600,000 additional North Carolinians.

DHHS can begin accepting Medicaid expansion applications on Dec. 1 from other eligible North Carolinians between ages 19 and 64. For more information about the expanded eligibility, go to https://medicaid.ncdhhs.gov/

For the 300,000 in the limited Family Planning program, DHHS will make contact by text messages, phone calls and emails, basically letting those eligible know to look out for a letter from their local Department of Social Services.

Cone, as well as other not-for-profit health systems in N.C., also cited projections of receiving funding from the Hospital Access and Stabilization Program.

The program provides acute-care hospitals with increased reimbursements for Medicaid patients that are funded through hospital assessments and federal matching funds. The initial HASP payment is projected to be received in the first quarter of its fiscal 2023-24.

“Additionally, changes to certificate of need regulation will reduce requirements in two to three years for certain clinical services,” Cone said.

Senate leader Phil Berger, R-Rockingham, said in citing his support for the additional CON reforms the availability in 2022 of the Healthcare Access and Stabilization Program (HASP) as a key element in the expansion pursuit.

According to the N.C. Healthcare Association, HASP would allow “North Carolina hospitals and health systems the opportunity to receive up to $1.8 billion in federal dollars to improve access to care for Medicaid patients.”

Hospital assessments had been a negotiating sticking point over the past nine years, even though the state’s major health-care systems have agreed to the assessments with the expectation that the additional federal Medicaid administrative funding will more than offset the annual expense.