Sutter Health's net income rises sharply
Sutter Health's investment portfolio surged back into the black in 2009 after being awash in losses the year before, according to the Sacramento-based health system's latest financial report.
The report, planned for release today, shows net income for the health care provider rose to $697 million systemwide, a marked improvement from the $187 million in 2008.
However, income from day-to-day operations dipped to $453 million last year from $461 million the year before, dropping the system's operating margin from 5.6 percent in 2008 to 5.2 percent in 2009.
In the nine-county Sacramento Sierra Region, operating income was $109 million, according to the report.
Improved investment performance buoyed the system's bottom line.
Last year's $244 million in investment income was a vast improvement from 2008, when the health care giant posted a $274 million loss, according to the company.
"The market recovery in 2009, combined with our prudent investment strategies, resulted in a sizable gain from investments," said Pat Fry, the company's president and CEO.
Because of the uncertain economy, Sutter cut capital improvements, putting off construction of a hospital in Elk Grove and delaying further work on electronic health record systems.
Last month, however, Sutter said it would resume plans to expand electronic medical records at more of its hospitals over the next five years, at an additional cost of $400 million.
Other capital projects could remain stalled depending on finances.
Officials will evaluate the Elk Grove hospital project sometime in the summer, said Sarah Krevans, the president of the health system's Sacramento Sierra Region. "That's a project that we're still very serious about."
While investment portfolios showed substantial improvement, Sutter hospitals continued dealing with the collateral damage from the recession.
Net revenue per patient dipped compared with the past two years, a result of the economy, officials of the not-for-profit system said.
With more people battered by the economy, Sutter hospitals have had to deal with the financial burden of caring for the uninsured and other patients who can't pay for services.
The health system said it invested a record $667 million in community benefits - including care and services to the poor and medically indigent, school programs and medical research.
That amount, however, also includes what Sutter officials said were "unpaid costs of participating in Medi-Cal," a sore point among health care providers who say government reimbursements for the program have been insufficient.
Cost-cutting measures were put in place to improve financial performance, hospital officials said, citing improved efficiencies in how supplies are bought and increased use of home-care services to allow patients to recover at home, not at the hospital.