Business & Real Estate

Sacramento’s Sutter Health saw steep decline in net income in 2015

The Anderson Lucchetti Women’s and Children’s Center on the Sutter Medical campus is one of the facilities where Sutter invested money in 2015. The health care system reported a large unreimbursed cost for Medi-Cal patients.
The Anderson Lucchetti Women’s and Children’s Center on the Sutter Medical campus is one of the facilities where Sutter invested money in 2015. The health care system reported a large unreimbursed cost for Medi-Cal patients. Sacramento Bee file

Sacramento-based Sutter Health reported net income of $81 million in 2015, a nearly 80 percent plunge from $402 million in 2014.

The nonprofit health system cited multiple factors that prompted the decline.

Sutter said it lost $142 million in investments and trading transactions last year, compared with a $39 million gain in 2014. The system said income from daily operations of its hospitals, care centers and other services totaled $287 million last year, down 31.5 percent from $419 million the prior year.

Sutter also noted that it invested $898 million in new facilities and life-saving technology throughout Northern California in 2015. Sutter said major earthquake/safety-related hospital replacements and renovations, plus new physician clinic construction projects, were ongoing throughout Northern California and the Bay Area last year.

Sutter said last year’s projects also included implementation of its network-wide electronic health record system, providing more than 1 million patients full-time online access to their physicians and medical records.

Sutter did see a nearly 9 percent gain in operating revenue, which rose to $11 billion last year from $10.1 billion in 2014.

“Strong and stable financial performance has allowed Sutter Health to invest more than $9 billion over the last decade to build and improve health care facilities and bring advanced patient care technology to those we serve,” Sutter Health President and CEO Sarah Krevans said in a statement. “In 2015, we experienced growth in the numbers of patients served and expanded access to health care in our communities.”

Krevans also said Sutter hospitals “cared for more Medi-Cal patients in our Northern California service area than any other system.”

Sutter’s financial report cited the impact of the federal Affordable Care Act, which expanded health care coverage to previously uninsured people, many of them now under Medi-Cal. Sutter said Medi-Cal reimbursements did not cover the overall costs of providing care.

Sutter Health said that in 2015 it invested $712 million more than the state paid to care for Medi-Cal patients, up 33 percent from a $535 million shortfall in 2014. The local system said Medi-Cal accounted for 20 percent of Sutter’s gross patient service revenue in 2015, compared with 19 percent in 2014.

The system said its total 2015 community benefit investment was $957 million, up nearly 25 percent from $767 million in 2014. That includes charity care, unreimbursed costs of providing care to Medi-Cal patients and investments in health education and public benefit programs such as community clinics and prenatal care for low-income patients.

Sutter facilities in the Sacramento region include Sutter Medical Center and the Sutter Center for Psychiatry in Sacramento, Sutter Roseville Medical Center, Sutter Davis Hospital, Sutter Auburn Faith Hospital and Sutter Amador Hospital in Jackson.

Mark Glover: 916-321-1184, @markhglover

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