Novant Health, a not-for-profit
healthcare system serving North Carolina and three other surrounding
states, reported net income of $158 million in 2010.
The health system's net income, also referred to as excess of
revenues over expenses, breaks down as follows: an operating income of
$65 million and investment income of $93 million.
"As a group of 13 hospitals, 366 physician clinics and 100 outpatient
centers, our health system and its organizations thrived together in a
poor economic environment when we might have struggled as separate
entities," commented Paul Wiles, president and CEO of Novant Health.
He explained that as a not-for-profit organization, Novant utilizes
its net income to fund new technology such as advanced MRI scanners,
cardiac catheterization laboratories and electronic health records. In
addition, a health system's net income helps fund construction,
community outreach services, charity care and other priorities.
"During one of the most significant periods or change in our nation's
economy and in the future direction of healthcare, our organization and
our staff have risen to the challenge by prioritizing the right goals
in 2010, which are all interconnected and important to short- and
long-term success," Wiles emphasized.
Novant Health focuses on four annual goals, one of which is
financial. The other three goals involve exceeding national benchmarks
in patient satisfaction, employee satisfaction and the quality of
Novant Health hospital participate in the nation's inpatient quality
public reporting program, which includes 25 separate measurements per
hospital ranging from heart disease to surgery to pneumonia care. The
U.S. Department of Health and Human Services publishes this comparative
database online at www.hospitalcompare.hhs.gov. In 2010, Novant
hospitals and their quality measurements ranked in the top 10 percent
nationwide, 90 percent of the time. "That means our staff provide a
level of quality patient care that is practically unmatched by any other
health system in the nation," Wiles emphasized. "First and foremost,
that accomplishment is important to patients who entrust their care to
us. In addition, it's relevant to our annual financial performance
because more of our payments from Medicare, insurance companies and
other sources will be tied to the quality of care in the future."
In 2009, the health system achieved a net income of $197 million,
compared to $158 million last year. Fred Hargett, chief financial
officer of Novant Health, explained that the biggest change between the
two years was related to investment income, which was positive last year
but below the prior year's results. This mimicked the stock market
performance from 2009 to 2010. Operating income was very strong in 2010
and would have been higher than the previous year except for several
one-time adjustments related to hospitals joining the Novant system
through merger and acquisition.
Hargett described some of the daunting trends and challenges facing
hospitals and healthcare systems in the years and decade ahead. The slow
economy, unemployment and related increases in the number of uninsured
patients continue to impact people's utilization of healthcare services.
People are cutting back, locally and nationally, on their use of
certain services: outpatient surgery primarily attributed to deferrals
or elective procedures; diagnostic imaging such as MRI and CT scans, due
mainly to higher deductibles in people's insurance plans; and physician
office visits, especially "well visits" which include physicians,
preventative screenings and follow-up visits after care and treatment.
On the flipside, Novant hospitals and facilities experienced increases
in services that tend to be considered more recession-proof: the number
of patients admitted to hospitals, inpatient surgeries and emergency
Novant hospitals also added new patient programs in 2010 which
positively influenced utilization of services. For instance, hospitals
located outside of major urban areas and in more rural locations
introduced new medical technologies and services for their communities
that improved access to care: digital mammography, teleneurology,
pulmonary rehabilitation, intensive wound care and expanded cardiac
catheterization services such as angioplasty.
Hargett predicts that healthcare providers that stay intimately
connected to the communities they serve will be more likely to succeed
in the new rollercoaster environment.
"Two powerful forces converged that will reshape the healthcare
industry as we know it - the economy's decline and the passage of the
federal reform law," Hargett commented. "And in all likelihood, these
historic events will have immediate and short-term negative effects on
healthcare providers. Hopefully the negative impact will be offset, in
the long run, if the government succeeds in helping uninsured people
gain access to coverage."
Charity care increased substantially in 2010 at Novant Health. The
health system provided $119 million in free care to individuals who
qualified for the organization's financial assistance programs. That's
up 12 percent from the previous year. Novant Health provided $469
million of total community benefit in 2010, which includes charity care,
community outreach, support of free medical clinics for the uninsured
and poor, unfunded care by state Medicaid programs and Medicare, and
In addition, bad debt expense rose to $178 million in 2010, an
increase of 21 percent from the previous year. To compound the
underfunding problem, the federal Medicare program for seniors also
began reducing payments to hospitals in 2010 and diverting those funds
to help pay for the new reform law and its insurance expansion. Medicare
will implement this annual cut to hositals for 10 consecutive years.
"Considering all of these converging factors, we're very pleased with
our health system's financial performance," Hargett concluded. "And as
we continue to prioritize quality patient care and outreach to our
communities, I think everyone is also accepting the national mandate
that our services must become more affordable."
Novant's strong bond ratings were reaffirmed in 2010 by the three
national agencies: Fitch, Moody's and Standard & Poor's. Novant
plans to invest $1.5 billion in capital over the next five years. The
health system recently (March 2011) opened a new community hospital in
Kernersville, NC, which is near Winston-Salem. This summer Brunswick
Novant Medical Center, a replacement hospital, will open in Supply, NC,
near the southernmost coast. Presbyterian Hospital recently (April 2011)
opened phase one of its major construction and modernization project
that includes a four-story addition with specialty nursing units for
cancer, cardiovascular, neurosciences and spine care. In addition, the
Novant Medical Group has begun the process of implementing and
electronic health record for patients in its physician clinics.
# # #
Novant Health is a not-for-profit integrated group
of 13 hospitals and a medical group consisting of 1,131 physicians in
366 clinic locations, caring for patients and communities in North
Carolina, Virginia, South Carolina and Georgia. Hospitals include the
following: Presbyterian Hospital, Presbyterian Orthopaedic Hospital,
Presbyterian Hospital Matthews and Presbyterian Hospital Huntersville in
the Charlotte, NC area; Forsyth Medical Center and Medical Park
Hospital in Winston-Salem, NC; Kernersville Medical Center,
Kernersville, NC; Thomasville Medical Center, Thomasville, NC; Brunswick
Community Hospital, Supply, NC; Rowan Regional Medical Center,
Salisbury, NC; Franklin Regional Medical Center, Louisburg, NC; Upstate
Carolina Medical Center, Gaffney, SC; and Prince William Hospital,
Manassas, VA. Other Novant facilities and programs include outpatient
surgery centers, medical plazas, rehabilitation programs, diagnostic
imaging centers and community helath outreach programs. Novant Health is
ranked 14th nationally among the 2011 Top 100 Integrated Healthcare
Networks, according to an analysis by the SDI health informatics