'09 revenue rebounds at CHS

Mar 10, 2010 — The Charlotte Observer

Karen Garloch

Mar. 10, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- After suffering a loss of $551 million in 2008, Carolinas HealthCare System rebounded in a big way last year.

The region's largest health-care provider ended 2009 with nearly $470 million in "revenue over expenses," according to its year-end financial report released at Tuesday's board meeting.

Just as the 2008 decline was mostly due to investment losses related to the stock market crash, the 2009 increase was also related to "all the gyrations of the market" as it began to bounce back, said Edward Brown III, who chairs the system's finance committee.

But investment income wasn't the only line item that improved in 2009.

Net operating revenue grew 13.7 percent in 2009 to $5.1 billion. And operating income went from $73 million in 2008 to $122 million in 2009.

Officials said the increase resulted from growth of the system, higher patient volumes and efficiencies in operations.

"We powered through the circumstances we found ourselves in," said system CEO Michael Tarwater. "It took creativity, perseverance and some very hard work on the part of our staff."

The system's "adjusted discharges," an industry measure for patient volume, rose 12.3 percent in 2009.

That was "the largest rate of growth we've seen in a decade," said Joe Piemont, the system's president and chief operating officer.

Unlike past years, officials did not attribute that increase to a growing Charlotte-area population.

"Every indication is that people switched to Carolinas HealthCare System," Piemont said. "It's the cumulative effect of all the things we've done to make the system more convenient and accessible."

For example, in 2009, Carolinas HealthCare entered into management agreements with six other hospitals in the Carolinas, which widened its network of hospitals from 23 in 2008 to 32 today.

Carolinas HealthCare System owns, manages or leases hospitals in 31 counties, including the flagship, 874-bed Carolinas Medical Center in Charlotte.

CHS is also seeing growth because of Levine Children's Hospital, which opened in 2007.

Total patient volume at Levine was up 20 percent in 2009 over 2008, and visits to the pediatric emergency room were up 10 percent.

Also, in November, CHS opened CMC-Steele Creek, a freestanding emergency department that is treating 300 patients a week, double the number that had been expected, officials said.

Carolinas HealthCare is a public, not-for-profit system that retains its earnings and reinvests them in expansion and improvements.

The system spent $534 million on capital projects in 2009 and plans to spend $1.9 billion on capital projects over the next five years, including completion of the new CMC-Lincoln hospital in Lincolnton.

Chief Financial Officer Greg Gombar said the system will pay for those improvements out of revenues, not by issuing new debt.

That's why the not-for-profit system needs an "operating margin," or a profit, he said -- so it can pay for medical equipment, renovations and new construction to stay modern.

Kannapolis ER facility funded

Board members Tuesday approved spending $17 million to build another freestanding emergency department, in Kannapolis. The 25,000-square-foot facility will be near Interstate 85 and Lane Street.

Carolinas HealthCare also plans to open three more freestanding ERs in Waxhaw, Harrisburg and in the NorthCross area (I-77 at Exit 25) in the next few years.

"We entered 2009 with a great deal of uncertainty," he added. "But we really decided that we would focus on the things that we could influence, and that was the delivery of health care.... All these things really converged into a great 2009."

Karen Garloch: 704-358-5078.

Newstex ID: KRTB-0038-42740092