Monday, February 17, 2020
Beaumont Health's net income increased to $390.2 million in 2019, an increase of $243.2 million over the previous year. The organization saw operating revenues rise to $4.7 billion, a $43.3 million increase over the $4.66 billion reported in 2018.
Net operating income for 2019 was $185.2 million (3.9% operating margin), a $55.4 million decrease from 2018’s result of $240.7 million (5.2 % operating margin).
“Last year, our total operating expenses rose .5%, or $21.4 million, compared to 2018. 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,” Beaumont Health Chief Financial Officer John Kerndl said.
In 2019, Beaumont experienced year-over-year volume increase 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%, 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. While we had strong investment results last year, we recognize potential future results might not be as favorable due to forces beyond our control,” Kerndl added.
The company’s treasury indicators also remained strong, as cash and investments were $2.3 billion on December 31, 2019 compared to $2.0 billion on December 31, 2018. Unrestricted days cash on hand was 195.1 days on December 31, 2019, as compared to 163.4 days on December 31, 2018. Total debt on December 31, 2019 was $1.52 billion, compared to the December 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. 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. 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 said.
Beaumont remains committed to reduce the cost of health care. The health system will continue to leverage the success of its ACO, which 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.
Beaumont Health
Beaumont Health is Michigan’s largest health care system and is most preferred for health care in Southeast Michigan, according to NRC Health survey data. The not-for-profit organization was created to provide patients with greater access to compassionate, extraordinary care, every day. Beaumont Health has a total net revenue of $4.7 billion and consists of eight hospitals with 3,429 beds, 145 outpatient sites, nearly 5,000 physicians, 38,000 employees and 3,500 volunteers. In 2018, Beaumont Health had about 178,000 inpatient discharges, 18,000 births and 573,000 emergency visits.