More Profit, Slimmer Margin at North Shore-LIJ

Crain’s Health Pulse
December 1, 2015

North Shore-LIJ Health System reported $81.6 million in operating income through three quarters of 2015, up 57.8% from the same period in 2014. The network's operating margin rose to 1.3%, up from 0.9% through September 2014, according to unaudited financial statements posted yesterday. Total operating revenue rose 16.9%, to $6.4 billion, which the system attributed to greater volume and higher payment rates. North Shore-LIJ also credited expansion of its ambulatory network, investments in joint ventures, its acquisitions of Phelps Memorial and Northern Westchester hospitals, revenue-cycle initiatives and higher premium revenue from CareConnect. But some of its member hospitals lost money, including Lenox Hill, which was $8.1 million in the red. In its financial analysis, NS-LIJ noted the network's performance was hurt by the "migration of certain services from inpatient to outpatient care settings as well as the continued shift in payer mix from traditional commercial payers to lower paying government and health care exchange payers." Total operating expenses rose 16.5%, to $6.3 billion; the acquisition of the two community hospitals played a large role in the spike, but there also were incremental costs related to higher volume. CareConnect lost $21.4 million through Sept. 30. Premium revenue nearly tripled to $155.9 million, as the startup insurer attracted 28,000 members. Operating income at North Shore University Hospital ($49.2 million), Long Island Jewish Medical Center ($42.3 million) and Staten Island University Hospital ($46.9 million) bolstered the system's performance. Southside Hospital lost $11 million.

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