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Leaked Documents Show Legacy Health Brought in $2.09 Billion in Patient Revenue While Operating Expenses Reached $821.5 Million

From hospital discharges to FTEs to finances, the numbers behind Legacy’s five Portland-area hospitals
December 18, 2015

Legacy Health’s profits were far lower than the nonprofit health system expected in the first six months of its April-to-March fiscal year, dragged down by poor investment performance despite a better-than expected operating margin, according to confidential documents leaked to The Lund Report.

From April. 1 through Sept. 30, the chain’s operating income was $47.6 million, significantly higher than its $37.1 million budget expectation. Its 5.5 percent operating margin beat the 4.4 percent margin that was forecast .But non-operating costs, including investments that performed poorly, left the chain financially behind expectations, with an $8.5 million hit recorded in the month of September alone because of unfavorable investment performance.

In earlier stories, The Lund Report examined the financial considerations underpinning Legacy’s negotiations to create a joint venture with insurance company PacificSource. Click HERE and HERE to read that reporting.

Documents also suggest that when it comes to costs and revenue related to healthcare itself, Legacy’s budget estimates were relatively close. The chain expected to receive $2.07 billion in patient service revenue from April through September, and instead received $2.09 billion. It expected operating expenses of $809.4 million, and instead had $821.5 million in operating expenses. These higher-than-budgeted expenses are largely due to higher-than-expected supply costs and a spending category tabled “utilities, insurance and other.”

On Sept. 30, Legacy Health had $2.02 billion in assets, including $68.9 million in cash and equivalents. At the end of the previous fiscal year six months earlier, it had $2.08 billion in assets, and $100 million in cash and equivalents.

Financial documents also provide a look at how Legacy’s hospitals and other divisions have performed so far, six months in to the current fiscal year, compared to what the company expected, as follows:

Legacy Emanuel Medical Center, April 1-Sept. 30:

  • Hospital discharges: 9,563, 10.5 percent more than expected.
  • Emergency department visits: 33,607, 4.6 percent more than expected.
  • Surgical cases, inpatient: 3,300, 9.5 percent more than expected.
  • Surgical cases, outpatient: 4,253, 5.4 percent more than expected.
  • Paid FTEs: 2,411, whereas Legacy budgeted for 2,300.
  • Operating margin: 7.46 percent, compared to 7.54 percent on the budget.
  • Net income, commonly known as profit: $25.4 million, 30 percent below budget.
  • Payer mix: 21.9 percent Medicare, 41 percent Medicaid, 35.4 percent commercial, 1.8 percent self-pay.
  • Spending: Of $280.6 million spent on operating expenses, $100.7 million went to salaries and wages, $27 million to employee benefits, $11.4 million to professional fees, $46.7 million to administrative services provided by Legacy Health, and $40 million went to supplies. The rest was divided amongst much smaller line items.
  • Assets: $553.95 million on Sept. 30, compared to $575.8 million on Aug. 31, and to $160.1 million on Sept. 30, 2014.

Legacy Good Samaritan Medical Center, April 1-Sept. 30:

  • Hospital discharges: 5,261 – just one higher than expected.
  • Emergency department visits: 14,216, down 6.2 percent.
  • Surgical cases, inpatient: 1,705, 3.5 percent more than expected.
  • Surgical cases, outpatient: 3,860, 6.5 percent more than expected.
  • Paid FTEs:1359, whereas Legacy budgeted for 1312.
  • Operating margin: 6.6 percent, compared to 5.7 percent on the budget.
  • Net income, commonly known as profit: $4.97 million, 62 percent below budget.
  • Payer mix: 47.4 percent Medicare, 19.2 percent Medicaid, 32.3 percent commercial, 1.1 percent self-pay.
  • Spending: Of $151.8 million spent on operating expenses, $55.9 million went to salaries and wages, $14.7 million to employee benefits, $24.9 million to administrative services, $26.4 million on supplies. The rest was divided among smaller line items.
  • Assets: $286.6 million on Sept. 30, compared to $297.9 million on Aug. 31 and $294.7 million on Sept. 30, 2014.

Legacy Meridian Park Medical Center, April 1-16:

  • Hospital discharges: 4,367, 3 percent more than expected.
  • Emergency department visits: 19,087, 3.6 percent fewer than expected.
  • Surgical cases, inpatient: 1,310, 6.7 percent more than expected.
  • Surgical cases, outpatient: 1,802, 2.9 percent fewer than expected.
  • Paid FTEs: 738, whereas Legacy budgeted for 750.
  • Operating margin: 14.1 percent, compared to 14.4 percent on the budget.
  • Net loss: $2.7 million, when the hospital budgeted for a $2.8 million net loss:
  • Payer mix: 51.2 percent Medicare, 12.2 percent Medicaid, 34.9 percent commercial, 1.7 percent self-pay.
  • Spending: Of $88.4 million spent on operating expenses, $29.8 went to salaries and wages, $8.3 million to salaries and benefits, $16 million to administrative services, $15.9 million tosupplies. The rest was divided among smaller line items.
  • Assets: $2.3 million on Sept. 30, $2.2 million on Aug. 31, and $ 2.3 million on Sept. 30, 2014.

Legacy Mount Hood Medical Center, April 1-Sept. 30:

  • Hospital discharges: 3,248, 9.1 percent more than expected.
  • Emergency department visits: 25,800, 0.2 percent more than expected.
  • Surgical cases, inpatient: 648, 6.2 percent more than expected.
  • Surgical cases, outpatient: 1,067, 6.3 percent more than expected.
  • Paid FTEs: 576, whereas Legacy budgeted for 545.
  • Operating margin: 7.9 percent, compared to 6.2 percent on the budget.
  • Net income, commonly known as profit: $4.6 million, 9 percent below budget.
  • Payer mix: 40.1 percent Medicare, 32.3 percent Medicaid, 24.1 percent commercial, 2.7 percent self-pay.
  • Spending: Of $64.4 million spent on operating expenses, $24 million went to salaries and wages, $6.3 to employee benefits, $10.6 million administrative services, $4.3 million purchased services. The rest was divided among smaller line items.
  • Assets: $98.6 million on Sept. 30, $102 million on Aug. 31, $98.1 million on Sept. 30, 2014.

Legacy Salmon Creek Medical Center, April 1-Sept. 30:

  • Hospital discharges: 7,289, 8.2 percent fewer than expected.
  • Emergency department visits: 36,029, up 3.4 percent.
  • Surgical cases, inpatient: 1,515, 10.8 percent fewer than expected.
  • Surgical cases, outpatient: 2,964, 5.7 percent fewer than expected.
  • Paid FTEs: 1,164, whereas Legacy budgeted for 1,167.
  • Operating margin: 14.7 percent, compared to 14.9 percent on the budget.
  • Net income, commonly known as profit: $18.2 million, 20 percent below budget.
  • Payer mix: 42.3 percent Medicare, 22.7 percent Medicaid, 33.4 percent commercial, 1.6 percent self-pay.
  • Spending: Of $125.7 million spent on operating expenses, $47.7 million went to salaries and wages, $12.4 to employee benefits,
  • Assets: $342.6 million on Sept. 30, $356.5 million on Aug. 31, $350.5 million.

In addition to the five hospitals Legacy Health already operates, a sixth hospital is expected to join the Portland-based nonprofit, which is not yet included in these

financial statements. Legacy is working through details ahead of an expected spring 2016 acquisition of Silverton Hospital, which would go by Legacy Silverton once the deal has closed. CLICK HERE TO READ MORE. In a future story, we’ll look into the financial performance of Legacy’s non-hospital divisions. Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood

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