Northwell Has 15% Revenue Bump after Adding Peconic

Crain’s Health Pulse
June 1, 2016

Northwell Health reported $20.9 million in operating income in the first quarter of 2016, a considerable improvement versus last year’s operating results for the period, but still a sliver of the system’s revenue. Northwell generated $2.4 billion in total operating revenue through the end of March, up 15.1% over the prior year. That translates into a 0.9% operating margin, which tracks closely with the nonprofit’s full-year 1% margin in 2015. Management attributed that double-digit growth to greater volume and payment rates, outpatient expansion, and enrollment increases at the system’s insurance companies. Peconic Bay Medical Center in Riverhead, L.I., officially became part of the system on Jan. 15, contributing $34.4 million in revenue through the end of March. Northwell said it experienced higher inpatient denial rates from insurers, which lowered revenue. Revenue from the system’s insurance products more than tripled to $138.7 million, with Northwell now covering about 93,000 members. Investments in the system’s ambulatory expansion, including joint ventures and costs related to the shift toward value-based payments, contributed to a 14.2% rise in operating expenses, to $2.4 billion. In acquiring Peconic, Northwell received a $37.5 million inherent contribution, which is equal to the value of the eastern Long Island hospital’s assets minus its liabilities.

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