Ballad Health officials reported a solid economic performance in its first full year of operations following the merger of two former health care rivals.
For the fiscal year ending June 30, operating cash flow improved 15.4% to $228.1 million from $197.6 million in the prior year, according to a written statement. In addition, total cash flow earnings before interest, taxes, depreciation and amortization [EBITDA] improved 27.5% to $254.6 million compared to $199.6 million for the previous 12-month period. Ballad’s EBITDA margin improved from 9.9% in the prior 12-month period to 12.5% for the most recent fiscal year.
“Ballad Health has so far been successful providing lower overall costs to consumers while also improving its own financial performance, proving that better quality should mean lower costs,” Chairman and CEO Alan Levine said in the statement. “Our improved financial performance is positive proof that by reducing lower acuity admissions and working with our payers across Medicare, Medicaid and commercial lines of services, we can reduce the cost of care for employers and consumers.”
Levine said combining the former Mountain States Health Alliance and Wellmont Health System allows Ballad to reduce “unnecessary duplication” of costs and allows the system to become stronger financially despite declining inpatient numbers in its 21 hospitals.
Total revenue grew 1.3% while expenses remained flat.
Ballad’s improved financial performance follows expense management efforts, improvements in productivity, reduced reliance on temporary and contract labor and focused supply cost management, according to the statement.
The company spent more than $1.04 billion on salaries, wages and benefits for its roughly 15,000 employees across the region.
Hospital-use rates continued to decline, which Levine said is a problem across rural areas. Ballad Health had 5,085 fewer hospital admissions, with approximately 4,290 of those admissions being lower acuity medical admissions.
Adjusted discharges declined 0.8% to 247,013, while the number of inpatient surgeries declined 2.7%, outpatient surgical procedures fell 1.4%, and emergency room visits declined 3.8%.
“Ballad Health is facing a rapidly changing landscape where our financial success is no longer judged solely by volume, but increasingly, how we care for fewer people more efficiently, effectively and with better outcomes,” Levine said. “Many of the quality metrics that we’ve seen improve have led to lower costs. Lower lengths of stay, reduced rates of hospital-acquired conditions, reduced readmissions and better integration with physicians have helped reduce the cost of care and helped Ballad Health achieve success with the new value-based purchasing environment.”
Prior to the merger, it was estimated that as many as 1,000 jobs would be eliminated had both health systems been acquired by systems based elsewhere. However, the administrative consolidation resulted in the elimination of approximately 200 administrative positions, according to the statement. According to the state of Tennessee, fewer job losses resulted from the merger than originally anticipated.
Since completing the merger, Ballad has recruited more than 150 new physicians and advanced practice providers, including cardiology in Wytheville and Norton, Virginia, nephrology in Abingdon and urology in Kingsport. Throughout the region, Ballad has also recruited neurology, orthopedics, pain management, hospitalists, psychiatry and other specialties, according to the statement.
The health care provider has also invested nearly $200 million in new equipment, diagnostic technology, building improvements, information technology infrastructure and a common electronic health records system, according to the statement.