The equities market downturn at the end of 2018 pulled Trinity Health into net loss territory in the latter half of the year, compared with more than $800 million in net income in the prior-year period.
The Livonia, Mich.-based health system weathered a $426.7 million investment loss in the six months ended Dec. 31, 2018—the first half of its fiscal 2019—compared with a gain of $478.6 million in the prior-year period. That led to $301.5 million in expenses over revenue in the six-month period, a significant swing from $806.4 million in revenue over expenses in the prior-year period.
It wasn't a stellar period on the operating front, either. Trinity's revenue increased 5.5% to $9.5 billion in the six months ended Dec. 31, 2018, compared with $9 billion in the prior-year period, while expenses rose 6% to $9.3 billion during that time. The system drew $140.3 million in operating income during the quarter, down 21% from $177.9 million in the prior-year period.
Trinity pegged its operating income decline to health plans accounted for under the equity market, the acquisition of MacNeal Hospital in Berwyn, Ill., and increased operating expenses. The MacNeal acquisition added $181.2 million in operating expenses, or a 2.1% increase. Beyond that, the system said it saw higher labor and supply costs, including in pharmaceuticals. Trinity's report shows labor costs rose 6.7% year-over-year, including an increase in contract labor costs. Margins were further dampened by increased payment denials from payers, Trinity said.
Like most of its peers, Trinity's performance was negatively affected by the volatile investment markets in the second half of calendar 2018. That contributed to Trinity's $419.6 million non-operating loss in the six months ended Dec. 31, 2018, compared with a $650.4 million gain in the prior-year period.
Trinity's discharges were nearly flat in the six months ended Dec. 31, 2018, year-over-year, increasing 1% to 294,000. Outpatient visits grew 4.2% year-over-year to 10.3 million, while emergency room visits were mostly flat at 1.2 million. Home health admissions were also flat at 46,000.
Trinity wrote in its financial statement it is cooperating with authorities regarding an investigation at its Mount Carmel Health System in Columbus, Ohio. The system faces dozens of lawsuits after it found that one if its physicians for at least 35 patients. Three patients died under his care between Oct. 25 and Nov. 21, 2018, according to the health system, which is still investigating whether proper intervention may have improved their conditions. As of Tuesday, 24 lawsuits had been filed related to the doctor's treatment, .
In addition to terminating the physician, Trinity CEO Dr. Richard Gilfillan that the system had removed 20 hospital nurses and pharmacists who were also involved.
"Trinity Health leaders have been and will continue to be in Columbus, working side-by-side with Mount Carmel leaders on these efforts," he said. "Our integrated team is seeking to identify immediate root causes and we will continue to examine how this happened and what we need to do to ensure it never occurs again—we will be asking outside experts to assist us in this process."