Another financial boost from its investment portfolio helped Cone Health, the Greensboro-based nonprofit system, exceed revenue by $162.2 million over expenses in the three quarters of fiscal year 2024.
If revenues exceed expenses in a nonprofit organization like Cone, that is profit in a for-profit company. Cone’s fiscal year ends on September 30.
For the same period in fiscal year 2022-23, Cone reported excess revenue over expenses of $107.4 million.
Cone serves approximately 500,000 patients, primarily in the Triad. The company employs more than 13,000 people, more than 700 physicians and 1,800 physician affiliates. Its network includes four acute care hospitals, a mental health facility, an accountable care organization and a health insurance plan.
Cone reported capital gains of $137 million, compared to $106 million a year earlier.
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Not-for-profit health systems such as Atrium Health, Atrium Health Wake Forest Baptist, Cone and Novant Health Inc. rely on investment income to increase their profits.
Cone also reported having nearly $6 million in “other income” and $4 million in income from an undisclosed joint venture.
Excluding non-core components, Cone reported operating profit of $15.2 million, compared to $11.5 million a year earlier.
Operating income increased 7.9% to $2.17 billion, driven by a 7.1% increase in net patient services revenue to $1.9 billion; a 16% increase in premium revenue to $168.2 million; and a 9.6% increase in other operating income to $86.9 million.
At the same time, Cone’s total expenses rose 7.7% to $2.15 billion. Salaries and wages rose 2.6% to $758.2 million.
Additional benefits increased 2.4 percent to $239.8 million, while “purchased (contract) personnel” – mostly additional travel nursing staff – were spent at $68.6 million, compared to $54.8 million a year earlier.
Cone said the company “continued to experience industry-wide financial challenges in the third quarter, particularly related to labor market dynamics, utility and drug costs, general cost inflation and payer rejections.”
The system also cited high average length of stay for inpatients and losses at Health Team Advantage and Triad Healthcare Network due to high medical claim costs.
Cone reported gross revenues from the Medicaid-related Hospital Access and Stabilization Program (HASP) of $13.9 million in its first year of participation. These revenues were offset by provider evaluation costs of $4.3 million.
The North Carolina Department of Health and Human Services announced in November that Triad and Northwest North Carolina hospitals will receive a total of $566.8 million in federal funding, serving as a crucial incentive for the Republican-dominated state legislature to approve Medicaid expansion.
HASP funding includes $219.8 million for Atrium Health Wake Forest Baptist Medical Center, $126.3 million for Moses Cone Hospital and $67.2 million for Forsyth Medical Center. Baptist received a significantly higher HASP payment because it serves a larger Medicaid population than Moses Cone and Forsyth.
Cone expects the HASP payments received in the fourth quarter to have a $100 million impact on operating results.
The report was posted on the Municipal Securities Rulemaking Board’s website at www.emma.msrb.org. Health systems’ quarterly financial reports are primarily intended for bondholders and rating agencies and are released seven to eight weeks after the end of a reporting quarter.
The third-quarter report was filed as Cone seeks regulatory approval for its acquisition by Washington, DC-based nonprofit charitable group Risant Health.
Risant is affiliated with California-based Kaiser Permanente, which is seeking a national network combining insurance and health care. Kaiser had revenue of about $101 billion in 2023. Risant is managed independently of Kaiser.
Cone and Risant said in June that Cone “will maintain its brand, name and mission and will retain its own board, CEO and leadership team. It will continue to work with health plans, providers and independent physicians.”
Cone CEO Dr. Mary Jo Cagle said patients “will see the same doctors, the same nurses and the same staff in the same locations as they do today. We do not anticipate that the type of care we provide will change as a result of the acquisition by Risant Health.”
The groups did not disclose the amount of the transaction. They expect the transaction to be completed by year-end.
