Pretax profits dropped steeply at Orange County’s largest hospitals during the past year.
The 28 largest hospitals’ pretax profits for the 12-month period that ended Sept. 30 slid 21% to $418.7 million, according to state data and Business Journal estimates.
Several hospitals had triple-digit drops, and most experienced smaller decreases.
It was the second consecutive year hospitals on the Business Journal’s annual list reported profit drops.
The list, though, is ranked by net patient revenue, and this year’s showed a comparatively small 2% fall in that category to $6.2 billion.
Pretax profit and net income data comes in most cases from California’s Office of Statewide Health Planning and Development. The Business Journal estimated numbers for two hospitals.
Twelve reported their profits decreased over the year. Five swung from profits to losses, and six others reported profit increases. Three facilities posted back-to-back years of losses. Two hospitals refused to disclose their profit figures.
Twenty hospitals reported that their income dropped, and six had revenue increases. Two figures are estimates.
Hospital employment fell 1.8% to 40,342.
The list is marked by several hospitals that had triple-digit declines in pretax profits from operations.
n No. 7, Children’s Hospital of Orange County, saw a 210.4% shift, swinging to a $38.3 million loss from a $34.7 million profit in the year-ago period.
CHOC said in a statement that its pretax profit was tied to “the sporadic recognition” of California’s provider fee program, which uses monies assessed on all hospitals by the state government to draw matching federal funds. The state then issues supplemental payments to hospitals in order to draw a tighter patient safety net.
The pediatric hospital said that in the 12 months ended Sept. 30, it “was only able to recognize a net $4 million from the program (compared to $50 million in the prior 12-month period).”
CHOC added that the reported loss was also “due to changes in value of interest rate swap derivatives, depreciation on our new patient care tower, and one time tower activation costs.
“Even with the minimum-level of provider fee revenues, earnings before interest, depreciation and amortization … the 12 months ended Sept. 30, 2014 were strong at $32.2 million.
“CHOC is on sound financial footing and remains ready to address the health care needs of children.”
CHOC’s net patient revenue fell 11% to $426.6 million.
n St. Joseph Hospital-Orange, the No. 3 hospital on this year’s list, also swung to a net loss. St. Joseph Orange, a property of Irvine-based St. Joseph Health, posted a pretax loss from operations of $5.6 million compared to a profit of $12 million a year ago, a 146.7% decrease.
St. Joseph Hospital said the loss was a result of “lower pediatric and orthopedic cases, more outpatient volumes moving to lower-cost settings and market changes outside of our control such as lower reimbursement rates.” The hospital said it returned to profitability in operations the last half of 2014 after implementing a $30 million turnaround plan.
St. Joseph-Orange’s net patient revenue was down 3% to $523.3 million.
n Meanwhile, UC Irvine Medical Center held the No. 1 spot on the hospital list.
UC Irvine Medical’s net patient revenue grew 8% to $854.7 million. Its profits rose 4% to $55.2 million.
n No. 2, Hoag Memorial Hospital Presbyterian, which has campuses in Newport Beach and Irvine, had a 1% net patient revenue decline to $779.6 million.
Its profit fell 13% to $135.2 million.
n Mission Hospital, No. 4, experienced a 113% rise in pretax profit to $67.9 million. The hospital, with locations in Mission Viejo and Laguna Beach, said net patient revenue grew 5% to $470 million.
n St. Jude Medical Center in Fullerton, a sister hospital, came in at No. 5 on the list. Its pretax profit from operations was down 13% to $54.1 million. The hospital’s net patient revenue slid 3% to $451.7 million.
n No. 6, Kaiser Permanente, which operates the county’s largest health maintenance organization, would not disclose its profit figures.
The Business Journal estimates that Kaiser, which has hospitals in Anaheim
and Irvine, had $450 million in net
patient revenue.
n Saddleback Memorial Medical Center, owned by Fountain Valley-based MemorialCare Health System, came in at No. 8.
Its pretax profit fell 22% to $29.2 million in the 12-month period. Net patient revenue at the hospital, which has campuses in Laguna Hills and San Clemente, fell 4% to $355.3 million.
n The list’s No. 9 entry is Tenet Healthcare Corp.’s Fountain Valley Regional Hospital and Medical Center. Fountain Valley’s pretax profit fell 44% to $12.7 million, and its net patient revenue dropped 10% to $309.5 million.
n Another MemorialCare property, Orange Coast Memorial Medical Center in Fountain Valley, rounds out the top 10 on the list. Its pretax profit fell 2% to $19.1 million. The hospital’s net patient revenue was down 3% to $265.4 million.
