Sutter Health Reports 2015 Earnings

Sacramento-based hospital system Sutter Health reported significantly stronger revenues in 2015 compared to the prior year, but its bottom line eroded due in part to poor performance of its investments.

Total revenue for Sutter last year was $11 billion, up 9% from 2014's $10.1 billion. But its total income/surplus was $81 million. That's compared to $402 million in 2014, a year-over-year decline of 77%.

According to Sutter, it posted a $78 million gain in investment income last year, down sharply from the $280 million in gains it reported in 2014.

Sutter's operating income from its hospitals and outpatient services was $287 million, compared to $419 million in 2014, a decline of 32%.

The hospital system said it invested $898 million in capital projects in 2015. It did not break out its investments for the year prior.

“Strong and stable financial performance has allowed Sutter Health to invest more than $9 billion over the last decade to build and improve healthcare facilities and bring advanced patient care technology to those we serve,” said Sutter Health Chief Executive Officer Sarah Krevans. “In 2015 we experienced growth in the numbers of patients served and expanded access to healthcare in our communities.”

Regarding community benefits, Sutter invested a total of $957 million last year, up from $767 in 2014. 

The company defined community benefits as charity care and unreimbursed costs for providing care to Medi-Cal patients, along with public benefits such as community health clinics and investments in health education programs.

In a statement, Sutter said it cared for  20% of all Medi-Cal patients discharged from hospitals in the Northern California counties served by its network in 2014. That is more than any other acute care provider in the state, Sutter claimed.

Overall, Sutter said it experienced a $712 million shortfall caring for Medi-Cal patients in 2015, compared to $535 million in 2014. Medi-Cal revenue accounted for 20% of the system’s gross patient service revenues last year, up from 19% in 2014.

Citing the impact of the Affordable Care Act, Sutter said its provision for charity care totaled $52 million last year, down from $91 million in 2014, although the company also noted that the federal healthcare reform law also drove up the number of Medi-Cal patients it has been treating in recent years.