A Healthy Year: Hospitals Grow Revenue; UCI Is No. 1
By VITA REED
Embattled Tenet Healthcare Corp. grabbed most of the headlines in the past year, but it was another solid year of revenue growth at Orange County hospitals that was the big story here.
Another top story: University of California Irvine Medical Center eclipsed long-time No. 1 Hoag Memorial Hospital Presbyterian in Newport Beach to take the top spot.
Overall, the 33 largest hospitals in OC reported 10% growth in net patient revenue to $3.5 billion for the 12 months through Sept. 30, according to this week’s Business Journal list. Last year’s crop of top hospitals reported a 12% jump in revenue for the 12-month period through June 30, 2002.
Revenue growth was across the board, with 28 of the 33 hospitals reporting an improvement. One hospital,Kaiser Foundation Hospital in Anaheim,didn’t make its results available and is a Business Journal estimate.
Hospitals’ net patient revenue data is obtained from the Office of Statewide Health Planning and Development.
Net income data came from the hospitals themselves.
Hospitals have had their challenges in recent years. On the positive side, they’ve been able to win better contract terms with health maintenance organizations and other payers. But they’ve also had to face a long-term nursing shortage, which has hiked salaries. And state laws requiring stricter nurse staffing ratios plus investment in costly medical technologies to stay competitive have also eaten into profits.
Meanwhile, OC hospitals will be watching a big shakeout at Santa Barbara-based Tenet this year. Last month, Tenet said it planned to sell or close 19 of its California hospitals. In Orange County, No. 9 Western Medical Center-Santa Ana, No. 16 Western Medical Center-Anaheim, No. 19 Coastal Communities Hospital in Santa Ana and No. 21 Chapman Medical Center are on the block.
Tenet is the county’s biggest hospital operator with nine facilities. One of its holdings,Santa Ana Hospital Medical Center,closed last year.
UCI Medical Center moved to the top spot with 18% growth in revenue to $404.3 million. But UCI Medical Center said that its net income fell 4% to $63.1 million for the 12 months through June.
No. 2 Hoag’s net patient revenue increased 11% to $401.2 million. The Newport Beach hospital’s net income had a healthy 22% gain to $33 million in the period ending August 31.
The list shows that the three local hospitals operated by Orange-based St. Joseph Health System are in good health. They include St. Joseph Hospital-Orange, St. Jude Medical Center and Mission Hospital.
No. 3 St. Joseph, the non-profit’s largest hospital, reported a 16% gain in revenue to $305.2 million, versus a year earlier, and a 36% surge in net income to $19.3 million.
St. Joseph started extricating itself from what it considered poorly paid managed care contracts about three years ago. And, starting this year, St. Joseph’s local hospitals are back in the provider network for Cypress-based managed healthcare player PacifiCare Health Systems Inc.
No. 4 St. Jude in Fullerton again followed St. Joseph on the list. St. Jude reported a revenue bump of 17% to $237.2 million, versus a year earlier, and a 72% jump in net income to $18.1 million.
“We have had significant success in health plan contracting, supply chain management and reducing employee turnover,” said Dru Ann Copping, director of marketing and public affairs.
St. Joseph’s third hospital,No. 6 Mission Hospital in Mission Viejo,saw a revenue hike of 17% to $214.1 million, versus a year earlier, and net income growth of 41% to $13.1 million.
Long Beach-based Memorial Health Services Inc. landed two hospitals in the top 10. No. 7 Saddleback Memorial Medical Center in Laguna Hills had a slim 2% revenue increase to $179.5 million, versus a year earlier. And No. 10 Anaheim Memorial Medical Center posted a 3% revenue increase to $141.1 million.
No. 8 Children’s Hospital of Orange County said its net patient revenue rose 18% to $168.4 million, versus a year earlier. But CHOC’s net income fell 56% to $900,000.
CHOC cited a combination of a 9% nursing salary hike on top of merit raises, increased nurse registry costs and a 73% increase in workers’ compensation-related insurance costs compared to the prior year, said Kerri Ruppert, the Orange-based hospital’s chief financial officer.
The number of licensed hospital beds in OC basically was flat at 6,530. Hospital employment rose 4% to 35,284.
Saddleback had the largest percentage gain of workers, seeing its employment number jump 38% to 2,070 workers.
Dropping off the list with Santa Ana Hospital was last year’s No. 31 Orange County Community Hospital of Buena Park, which closed in February 2003.
