North Shore-LIJ Ends First Nine Months with Higher Margin

Modern Healthcare
December 30, 2015

North Shore-LIJ Health System, which will become Northwell Health in the new year, ended the first nine months of its fiscal year with a greater operating margin despite its ambitious and costly expansion efforts.

Revenue grew through the system's third quarter to total $6.4 billion as North Shore-LIJ added hospitals and insurers through its health plans.

The system picked up Phelps Memorial Hospital and Northern Westchester Hospital roughly a year ago. That boosted the system's revenue through Sept. 30 by about $373 million. CareConnect, the system's health plan, more than doubled its membership to 28,000 during the same period, from 12,000 the prior year. Premium revenue grew 180% to $156 million for the first nine months of the year. That's compared with $56.7 million the prior year period.

Higher volume and higher rates paid by insurers, as well as an expanded physician network, contributed to the system's 16.9% operating revenue growth in the nine-month period.

The system's expenses grew rapidly at 16.5% to total $6.3 billion. The new hospitals accounted for 6.7% of the expense growth.

North Shore-LIJ's insurance arm also posted losses of $21.4 million for the period. That's compared with losses of $17.4 million in the first nine months of last year.

The system ended the period with an operating margin of 1.3% and a surplus of $81.6 million.

That's slightly better than the 0.9% operating margin for the same period a year ago, when North Shore-LIJ reported an operating surplus of $51.7 million on operating revenue of $5.4 billion.

The system's investment performance left the system break-even after accounting for non-operating gains and losses. The net surplus was $800,000 for the nine months, after excluding certain acquisition gains and an accounting loss. That's compared with net surplus of $109.7 million for the first nine months of last year.

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