Sutter Health Announces 2013 Financial Performance
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The Sutter Health network of doctors, hospitals and other health care service providers announced its financial performance for 2013. Total income for 2013 was $300 million, compared to $735 million in 2012. The system’s total operating revenues were $9.6 billion for 2013 and 2012. Sutter Health posted $380 million in investment income and changes in net unrealized gains and losses from investments classified as trading in 2013, compared to $242 million in 2012. Sutter Health posted a combined 2013 systemwide loss from the day-to-day operations of its hospitals, care centers and other services of $22 million compared to a gain of $549 million in 2012.
Sutter Health’s 2013 operating performance includes $122 million of net supplemental payments associated with California’s temporary program to obtain federal matching dollars to partially offset underpayments in previous years for the care of Medi-Cal patients. Sutter Health cared for 22 percent of all Medi-Cal patients discharged from hospitals in the counties served by its network in 2012 according to OSHPD data—more than any other health care provider organization. (2013 OSHPD Medi-Cal data not yet available.)
Community-Based Investments Continue
Sutter Health invested over $1 billion in new facilities and lifesaving technology throughout Northern California. Major earthquake safety-related hospital replacements and renovations, along with new physician clinic construction projects, were under way in 2013 in multiple communities including Santa Rosa, Oakland and Sacramento, for a total anticipated investment of $2 billion. Sutter Health also continued the implementation of its network-wide electronic health record (EHR), which currently connects all of the organization’s medical foundations (physician organizations) and the majority of its acute care hospitals. Nearly one million Sutter patients have anytime, anywhere, secure online access to their medical record.
“Despite an increasingly challenging operating environment, Sutter Health’s balance sheet remains strong, and we continued critical investments in 2013 to enhance access to health care services and improve clinical quality and efficiency,” said Sutter Health President and CEO Pat Fry.
The network increased its investment in programs that align with principles of health care reform. “Sutter Health is moving aggressively to transform health care from the nation’s current model, where payments are based largely on volumes, to one based on providing patients with the right care, at the right time and in the right place,” said Fry. While these programs reduce hospital utilization, they can also negatively impact revenues. For example, Sutter Health’s acclaimed Advanced Illness Management program for patients living with serious or advancing illnesses reduced hospitalizations over a 90-day period by 63 percent and saved government payers and commercial health plans an estimated $15 million in reimbursement.
As part of its broad-based effort to improve efficiency, Sutter Health in 2013 opened a 300,000-square-foot centralized business support services hub in Roseville. The center consolidates dozens of outlying administrative service units, with annual cost savings estimated to reach $300 million in five years.
In 2013 Sutter Health also created the infrastructure for its Sutter Health Plus health plan, which began serving members in January 2014. “A health plan gives us an important new way to fulfill our ‘health care made personal’ strategy by allowing us to help manage the total care of patients,” said Fry. “We want to be a model for quality and affordability, and operating a health plan helps us accomplish this goal.”
Record Investment in Care for the Underserved
During 2013, Sutter continued to provide record-high levels of care and services for the poor and underserved and other benefits for the broader community. Sutter Health’s 2013 commitment to community benefit was $901 million ($795 million in 2012). This amount includes traditional charity care and unreimbursed costs of providing care to Medi-Cal patients, as well as investments in health education and public benefit programs such as community clinics and prenatal care for low-income patients.
Sutter Health’s commitment to delivering charity care to patients continued to grow, reaching another all-time high of $166 million in 2013, compared to $153 million in 2012. Sutter’s 2013 charity care investment represents an average of more than $3 million per week.
Dollars in millions
|Operating (Loss) Income||(22)||549|
|Change in net unrealized gains/losses from investments|
|classified as trading||203||137|
|Less income attributable to non-controlling interests||(58)||(56)|
|Income attributable to Sutter Health||300||735|
Serving patients and their families in more than 100 Northern California cities and towns, Sutter Health doctors, hospitals and other health care service providers join together and share expertise to advance health care quality, access to care, and patient satisfaction. The Sutter Medical Network includes many of California’s top-performing, highest quality physician organizations, as measured annually by the Integrated Healthcare Organization. Sutter-affiliated hospitals are regional leaders in cardiac care, women’s and children’s services, cancer care, orthopedics and advanced patient safety technology. For more information about the not-for-profit Sutter Health family, please visit www.sutterhealth.org.