Ballad announces strong quarter under combined budget

Johnson City Press • Nov 8, 2018 at 10:32 PM

Savings from joined operations made for a strong financial foundation for Ballad Health in its first quarter since the region’s two dominant health systems merged.

According to financial results released Thursday by the system, revenue increased 2 percent compared to the same quarter last year, before the budgets of the former Mountain States Health Alliance and Wellmont Health System were combined. Operating cash flow increased 9.8 percent, to $45.3 million, and total cash flow improved 25.2 percent to $52.6 million. Expenses increased by 1.5 percent, making for a wider operating margin.

Ballad’s leadership attributed the healthy showing to a systemwide search for savings, including a 34 percent reduction in the use of temporary labor, improvements in productivity and tight management of supply costs. The system spent $1.5 million more on salaries, wages and benefits for employees in this quarter, increasing that line item to $267.1 million.

“Ballad Health is committed to contributing to the economic success of our region,” said Alan Levine, chairman and chief executive officer of Ballad Health, in an emailed statement. “Because we remained a locally operated system through our merger, we continue to put investment back into our communities through employment and through good-paying jobs. At the same time, we are focused on managing our labor costs, so this growth, and our margins, are sustainable and will support ongoing capital investment into our facilities as well as the investments we are committed to which will improve the health of our region.”

Mirroring a national trend for rural hospital systems, Ballad’s volume of patients admitted to its hospitals declined 4.3 percent in the quarter.

Partly driven by changes to the nation’s health care delivery system, Levine said some of the decline can be attributed to Ballad’s and area primary care physicians’ efforts to reduce unnecessary admissions and encourage the use of lower-cost services, like urgent care clinics, when possible.

“Despite the ongoing changes in the landscape that further reduce the demand for inpatient hospital care, this was a very successful first quarter as the board and management team have worked hard to begin achieving the benefits of the merger between Mountain States Health Alliance and Wellmont Health System,” Levine said. “Our financial success will be driven based on how we adapt to this changing landscape. The premise behind the merger was that we cannot succeed by increasing prices, or increasing unnecessary utilization, but rather, we will be better stewards of these community assets by reducing unnecessary cost and duplication, while investing well in the services and programs that improve patient outcomes, reduce waste, and improve technology.”

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