Catholic Health Initiatives Shows Improved Results in Fiscal Year 2015

Nation’s Second-Largest Nonprofit Health System Posts 36% Increase in EBIDA

09/25/15 Press Release

Catholic Health Initiatives (CHI), the nation’s second-largest nonprofit health system, showed continued financial improvement and a solid balance sheet in the 2015 fiscal year, posting significant gains in core regional markets across the national enterprise.

CHI’s operating earnings before interest, depreciation and amortization (EBIDA) and before restructuring rose to nearly $1.3 billion -- a 36% increase over the previous year’s total of $926 million. Operating EBIDA margin increased to 8.3% from 6.8%.

The national health system, which operates 105 hospitals and hundreds of other care sites in 19 states, posted $169.8 million in income from operations before restructuring, and increased its annual revenue to $15.2 billion – a 12 % increase from the 2014 fiscal year.

Annual revenues at CHI have nearly doubled in the last five years through robust operational growth in core markets and a series of strategic acquisitions designed to create and sustain high-functioning regional networks through investments in areas such as insurance, technology and a fast-growing physician enterprise. The organization has added 26 hospitals across its national enterprise in the last two years.

“Over the last several years, we’ve established a very solid foundation for the future – and we continue to build on that foundation as we move forward,” said Dean Swindle, CHI’s president of enterprise business lines and chief financial officer.

“Key strategic acquisitions in areas such as Texas, North Dakota, Ohio and Washington have made CHI much stronger as we enter the “Next Era” of a dramatically transformed health care system in this country,” Swindle added. “Simply put, we’ve invested in growth to strengthen a system that will continue to provide the highest quality care at lower costs and serve all of our communities more effectively through delivery models focused on population health.”

CHI, which had no presence in the burgeoning Texas market just two years ago, has acquired facilities in Houston and across the southeast section of the state, rapidly building a well-integrated network with more than $2 billion in annual revenues. In Kentucky, CHI affiliate KentuckyOne Health, the state’s largest health network, posted an improvement of more than $142 million in the 2015 fiscal year through increased patient volume, enhanced operating performance and expense reductions.

Overall, CHI demonstrated substantial improvement in 2015 despite a challenging situation in Nebraska, where a dispute with the state’s largest insurer forced CHI Health out of network for most of the year and resulted in a reduction of nearly $162 million in operating EBIDA. Since going back in network in mid-July, CHI Health has seen patient activity increase at a significant pace across the state.

In the 2015 fiscal year, CHI provided approximately $980 million in charity care and community benefit – a nearly 8% increase over 2014. Including the unpaid cost of Medicare, CHI’s total contributions to those in need totaled approximately $1.6 billion.

Key statistics for FY 2015:

  • Operating income before restructuring: $169.7 million; 1.1% operating margin.
  • Operating EBIDA before restructuring in the fourth quarter totaled nearly $293 million, an increase of almost 43% from the same period in 2014.
  • System wide total revenue increased to approximately $15.2 billion.
  • Operating EBIDA before restructuring in FY15 was nearly $1.3 billion – a gain of more than $329.3 million, or 35.6% higher than in FY14. Operating EBIDA margin: 8.3%.
  • Total assets grew 6% to $23 billion from $21.8 billion in 2014.
  • Significant improvements in several other divisions: $104.6 million in the Pacific Northwest; $53 million in Fargo, which includes the Minnesota and North Dakota markets; and $28 million in Iowa.
  • CHI continues to invest considerable resources to prepare for the “Next Era” of health care and the transformation to valued-based delivery and payment models. These investments in the development of these new capabilities totaled more than $300 million in FY15 – including about $225 million for the continuing development and implementation of a system wide electronic health record.
  • CHI is focused on improvements in clinical operations to increase productivity, sustain margins and improve outcomes. This includes addressing clinical variability to reduce costs, improving quality of care and building a consistent consumer experience that aligns with CHI’s brand. CHI has identified multiple areas in the newest phase of this initiative, which includes two principal components: Reductions in national and regional overhead expense, and continued financial improvements in physician enterprise through productivity and improvement in referral management and the continuum of care.

About Catholic Health Initiatives: Catholic Health Initiatives, a nonprofit, faith-based health system formed in 1996 through the consolidation of four Catholic health systems, expresses its mission each day by creating and nurturing healthy communities in the hundreds of sites across the nation where it provides care. The nation’s second-largest nonprofit health system, Englewood, Colorado-based CHI operates in 19 states and comprises 105 hospitals, including four academic health centers and major teaching hospitals and 30 critical-access facilities; community health-services organizations; accredited nursing colleges; home-health agencies; living communities; and other facilities that span the inpatient and outpatient continuum of care. In fiscal year 2015, CHI provided approximately $969 million in charity care and community benefit – an 8% increase over the previous year -- for programs and services for the poor, free clinics, education and research. Charity care and community benefit totaled more than $1.6 billion with the inclusion of the unpaid costs of Medicare. The health system, which generated total operating revenues of $15.2 billion in fiscal year 2015, has total assets of $23 billion. Learn more at www.catholichealthinitiatives.org

Over the last several years, we’ve established a very solid foundation for the future – and we continue to build on that foundation as we move forward.

- Dean Swindle, CHI’s president of enterprise business lines and chief financial officer
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Michael Romano
National Director, Media Relations
p: 303-383-2720
e: michaelromano@catholichealth.net