Erlanger Health System said Inpatient volumes declined during the first quarter as COVID cases rapidly increased depressing normal capacity and activity levels. As a result, system admissions were 6.7 percent less than budget and 2.3 percent under prior year.
However, admissions for Children’s, Erlanger East and Erlanger North exceeded budget and prior year.
Emergency room visits were 10.5 percent more than budget and 15.4 percent over prior year while emergency room admits were 6.9 percent less than budget and 14.6 percent under prior year. The emergency room conversion rate to inpatient was 16 percent compared to budget of 19 percent and prior year conversion rate of 22 percent.
Inpatient surgical volumes, including heart, orthopedic, and neurosurgery, were less than budget and prior year. Births were in line with budget and 1.9 percent over prior year. Outpatient surgeries for the quarter were less than budget by 3.2 percent and consistent with prior year.
Observation days were 17 percent less than budget and 10.8 percent under prior year. Physician visits were more than budget by 1.1 percent and over prior year by 1.9 percent.
Cardiac cath lab patients less than budget by 13.6 percent and over prior year by 1.6 percent.
Officials said net patient revenue was 3.3 percent less than budget due to lower volumes in admissions and surgeries. Total operating revenue was under budget by 3.6 percent and 1.7 percent less than prior year. However, net patient revenue per adjusted admission was $9,233 as compared to budget of $8,677 reflecting the favorable payer mix shift to higher commercial utilization, as well as continued improvements in the revenue cycle.
Commercial utilization was strong at 40.3 percent compared to budget of 37.9 percent and prior year of 37.6 percent.
Officials said, "Overall effective expense management was key in driving a positive margin for the month. The Management Action Plan initiatives continue to have significant positive contributions to long-term positive margin sustainability. Positive variance in drug spend year to date compared to prior year is due to reduction in oncology program and savings from 340b and pharmacy contracts."
Despite the lower patient numbers, during the October Board Budget & Finance Committee, Erlanger officials reported that "net income from operations, including provider relief funds, for Fiscal Year 2020-2021 totaled $38.5 million compared to a budgeted operating income of $13.3 million. The health system also reported net income from operations for the first quarter of Fiscal Year 2021-2022 of $8.3 million. These first quarter results outperformed budget even with a COVID-19 surge during September."
The quarterly report says federal stimulus funds were counted toward the revenue totals.
Officials said, "Additionally, Erlanger received favorable rating actions from Moody’s Investors Service and Fitch Ratings. Moody’s has upgraded Erlanger’s revenue bond rating to Baa2 with a stable outlook and Fitch has affirmed its BBB rating and assigned a Positive Outlook. Both rating agencies commented on Erlanger’s performance improvement, solid growth in liquidity and leading market share as drivers of the rating actions. These accomplishments, made all the more remarkable in the setting of the COVID-19 pandemic, national economic challenges, and industry pressures, would not have been possible without thoughtful leadership, decisive action, and the unparalleled dedication of Erlanger associates."
Erlanger Trustee Jim Coleman said, “It’s a true testament to the Erlanger team and leadership that they never faltered while facing the uncertainty throughout this pandemic, and the financials show the organization is not just surviving but thriving. Erlanger strengthened its operational performance over Fiscal Year 2020 evidenced by growing liquidity as well as net operating income of $10 million before recognition of provider relief funds. This is a credit to leadership and operational execution by all members of the Erlanger team.”
Lynn DeJaco, Chief Financial Officer for Erlanger stated, “The past two years have been daunting to every healthcare organization, but Erlanger understood the importance of remaining fiscally responsible and financially secure in order to continue to serve our region. This team’s dedication has withstood the many challenges of multiple COVID-19 surges, including supply chain issues and fatigue, to compassionately care for their patients.”