Southern California hospitals 2014 financial realities

LAC OC Net Op Inc

Source: State of Reform, data collected from OSHPD

State of Reform’s ongoing investigation of the financial health of hospitals by region delves into Southern California hospitals, starting with Orange County and Los Angeles County. Stay tuned as this series probes California’s hospitals on a sub-regional basis in the coming weeks and months.

Net operating income for Orange County hospitals has exceeded that of LA County, despite the former having less than a third of the total number of hospitals. Orange County hospitals posted a total net operating income of $260 million in 2014 compared to the $66 million reported by LA County Hospitals in the same annual report.

Net operating income declined for both counties between 2013 and 2014. Orange County saw a 12 percent decline in net operating income, while LA County experienced a more dramatic 77 percent drop.

Both counties’ declines were softened by net non-operating income, such as real estate investments, unrestricted donations, and other sources. When factoring in net non-operating profits, Orange County’s decline from 2013 to 2014 is just over 1.5 percent. Los Angeles Counties drop adjusts to just below 40 percent.

Data was gathered by State of Reform from the California Office of Statewide Health Planning & Development (OSHPD).

Healthy Margins in Orange County:

All but three of the 19 hospitals submitting reports to the OSHPD posted positive net operating margins in 2014. The net total income for 2014 came to more than $487 million. Despite a slight decline from 2013, the margin on total revenue for Orange County hospitals remained a strong 9 percent for 2014.

Orange County hospitals with the largest 2014 margin on total revenue percentage include:

  • Hoag Orthopedic Institute: 28.89% ($22.1 million)
  • Hoag Memorial Hospital Presbyterian: 22.83% ($139.7 million)
  • Placentia-Linda Community Hospital: 16.32% ($15 million)
  • Jude Medical Center: 15.89% ($72.7 million)

The two Orange County hospitals that posted negative margins on total revenue for 2014 include:

  • Newport Specialty Hospital: -47.05% (-$1.3 million)
  • Children’s Hospital at Orange County: -7.45% (-$32.3 million)

Shrinking Margins in Los Angeles County:

Of the 65 hospitals submitting reports to the OSHPD, 31 posted a net loss for 2014. From 2013 to 2014, 38 hospitals saw a decline in net operating income. On average, hospitals saw a reduction of $3.4 million in net operating income from 2013 to 2014.

Source: State of Reform, data collected from OSHPD

Source: State of Reform, data collected from OSHPD

Despite experiencing a significant decline in income from 2013 to 2014, LA County Hospitals still managed an overall margin of over 4.5 percent. Notably, operational income accounted for only 8.5 percent of total income.

The ten LA County hospitals that posted the strongest margins on total revenue for 2014 include:

  1. Monrovia Memorial Hospital: 33.2% ($16.2 million)
  2. Los Angeles Community Hospital: 29.22% ($33.4 million)
  3. Kindred Hospital – Los Angeles: 23.23% ($13.5 million)
  4. Aurora Charter Oak: 19.78% ($7.4 million)
  5. Kindred Hospital – Baldwin Park: 17.7% ($7.9 million)
  6. USC Kenneth Norris Jr. Cancer Hospital: 15.28% ($25.5 million)
  7. LAC/Olive View – UCLA Medical Center: 15.1% ($61.9 million)
  8. Alhambra Hospital Medical Center: 13.8% ($13.7 million)
  9. Lakewood Regional Medical Center: 11.9% ($22.6 million)
  10. Long Beach Memorial Medical Center: 11.9% ($63.8 million)

The ten hospitals that posted the biggest losses for 2014 include:

  1. Downey Regional Medical Center: -41.79% (-$55.3 million)
  2. Community Hospital of Long Beach: -24.75% (-$11.7 million)
  3. Temple Community Hospital: -21.96% (-$4.5 million)
  4. Glendale Memorial Hospital & Health Center: -19.71% (-$34.8 million)
  5. Vincent Medical Center: -16.77% (-$31.3 million)
  6. Earl & Lorraine Miller Children’s Hospital: -13.9% (-$42.6 million)
  7. USC Verdugo Hills Hospital: -10.33% (-$7.9 million)
  8. Barlow Respiratory Hospital: -9.17% (-$4.2 million)
  9. Joyce Eisenberg Keefer Medical Center: -8.92% (-$3.3 million
  10. Mary Medical Center – Long Beach: -7.83% (-$16.6 million)

Complete financial data is included in State of Reform’s full report.