Novant Health, a
not-for-profit healthcare system serving North Carolina and three surrounding
states, today announced the results of its 2012 fiscal year, reporting a net
income of $274 million in 2012.
system's net income, also referred to as excess of revenues over expenses,
breaks down as follows: an operating
income of $185 million, investment income of $109 million, and other
non-operating losses and expenses of $20 million. In the prior fiscal year of 2011, the health
system recorded a net income of $1 million, comprised of $20 million of
operating income and $19 million in investment losses.
"Faced by the
constant changes in the healthcare industry, our net income provides the
foundation needed to invest in our ongoing commitment to providing excellent
patient care," said Carl Armato, Novant Health's president and CEO. "As a
not-for-profit organization, we utilize our income to invest in advancing
technologies and medical innovations, as well as to expand access to services
to meet the ongoing needs of patients and our communities."
that in 2012, Novant significantly advanced its transition from paper to
electronic health records, which has become a national priority. When complete, the conversion will cost
approximately $600 million. By year-end,
60 percent of the 350 physician clinics that comprise the Novant Medical Group
had transitioned to the new technology.
The remaining clinics will complete the changeover in the fall of this
year. One of the electronic health
record's benefits includes an online "MyChart" function, where patients can
request prescription renewals, schedule appointments, view lab results, receive
reminders about important health checkups and communicate directly with their
nurses and practitioners by email. So
far, 107,000 patients have created an online account using MyChart. The transformation to electronic health
records at Novant hospitals begins in late 2013 and will continue for the next
finances help fund key strategic initiatives like the electronic health record
as well as other projects to meet growing demand for services," Armato
continues to invest in expanding patient access. In June, 2012 the organization
broke ground on a new hospital in Haymarket, Virginia to meet the growing needs
of the Northern Virginia area, currently served by Novant's Prince William
Hospital in nearby Manassas. The new
hospital is scheduled to open in 2014.
Other major Novant
expansion projects proceeded or culminated last year: construction of
additional patient rooms at one of the busiest facilities in the state,
Presbyterian Hospital Matthews in Matthews, NC; development of a major
outpatient campus including free-standing emergency room in Clemmons, NC;
completion of an inpatient geriatric psychiatry unit at Franklin Regional
Medical Center in Louisburg, NC; and the opening of a major inpatient expansion
of Presbyterian Hospital Huntersville in Huntersville, NC.
financial year in 2012 will help to continue financing a major portion of
expansion projects as well as the transformation to a comprehensive electronic
performance improved significantly in 2012 and reflected the strong performance
throughout the stock market. Additionally,
Novant Health experienced increases in the number of patients utilizing its
services. The number of patients
requiring hospitalization rose 2 percent while emergency room visits increased
4.5 percent in 2012.
studies increased almost 2 percent, which includes ultrasounds, MRI and CT
scans. Some service volumes remained
unchanged last year, mainly those that proved sensitive to the economic
downturn when consumers began cutting back on their use of services such as
outpatient procedures and elective surgery.
that finances are one of six overall health system goals which are considered
equal and highly dependent upon one another: exceeding national benchmarks in
patient satisfaction, the quality of medical care, the safety of care provided,
converting to a dynamic electronic health record system and transforming care
in areas that are meaningful to patients, such as increasing the amount of time
nurses can spend with patients.
participate in state and national quality public reporting programs and
consistently rank as national leaders.
"We are proud of
our commitment to quality care," Armato continued. "While the nation continues to demand
affordability in healthcare, they also demand quality outcomes. We have made
significant investments in ensuring all Novant Health employees understand
their role in delivering safe, quality care to our patients."
another key strategy during 2012. Its
Shared Services Division announced partnerships last year with Ashe Memorial in
Jefferson, NC, and Memorial University Health in Savannah, Georgia, and more
recently with Cape Fear Valley Health System in Fayetteville, NC. Under these agreements, the three healthcare
organizations receive the benefits of sharing resources with Novant, while
maintaining local autonomy.
"We must all adapt
to the dynamic landscape of the healthcare industry," Armato commented. "Through Novant Shared Services we can expand our quality care while
lowering cost structures, reducing duplication and growing responsibly to meet
the needs of our communities."
chief financial officer of Novant Health, described another priority that
continues to impact organizational finances, yet is a cornerstone of the health
system’s not-for-profit mission.
"The amount of
charity care Novant Health facilities provided free to patients was consistent
with 2011, totaling $123 million," said Hargett. "Overall, Novant provided $546 million in
community benefit last year, 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 other expenses."
Bad debt, which is
not included in community benefit reporting, continued to be high in 2012 but
did not substantially increase from 2011.
In 2013, Novant
Health expects to issue approximately $600 million of bonds. Half of that amount involves refinancing
existing debt, while the other half would finance future projects as well as
some construction already underway.
interest expense, by accessing rates that continue at an all-time low, will
save Novant Health approximately $27 million.
As the healthcare industry continues to face unprecedented changes and
challenges, saving money is the right strategy to protect our ability to
continuously invest in the organization," Hargett said.
pointed out that financial experts nationwide continue to describe the outlook
for healthcare providers as vulnerable.
The federal Medicare program for seniors continues to reduce payments to
hospitals and divert those funds to help pay for the health reform law and its
insurance expansion. Medicare is
implementing annual cuts to hospitals for 10 consecutive years to help pay for
insurance expansion. Novant hospitals
are now experiencing the third year of those decreases.
response to the many challenges the industry is experiencing, Novant Health
commissioned an economic impact study of its operations to understand the
organization’s full effect on the local economy. The study is expected to be
released later in April.
Novant Health Financial Results