Dignity Health Reports Financial Results for FY 2018
SAN FRANCISCO – September 28, 2018 – Dignity Health, one of the nation's largest health care systems, today announced the results of its 2018 fiscal year ended June 30, posting net income of $933 million on $14.2 billion in revenue. This includes $529 million in operating income in 2018 compared to a $67 million operating loss in 2017. Net income includes $217 million in payments that relate to the prior year for the California Provider Fee and a one-time gain of $120 million from the transaction involving U.S. HealthWorks.
Results were released following a standard audit of Dignity Health’s financial statements by its public accounting firm.
“Our business model continues to drive strong performance through a disciplined approach to managing our operations and growth opportunities,” said Lloyd H. Dean, Dignity Health’s president/chief executive officer. “We remain steadfast in the belief that we can deliver a bold new health care enterprise of the future through our alignment with Catholic Healthcare Initiatives. Our values will always guide us to address the needs of the communities we serve, and we will continue to advocate for access to high-quality, affordable care for everyone.”
In FY 2018 Dignity Health provided $2.1 billion in charity care, community health programs, and other community support programs including subsidizing the unreimbursed costs of government programs.
“Our focus on transformation is the right thing to do,” said Daniel Morissette, Dignity Health’s senior executive vice president/chief financial officer. “We see improvement in our operations, financial performance, key technology partnerships, quality scores, and most importantly, the patient experience across Dignity Health. I could not be more thankful to our 60,000-plus employees who work every day to stay true to our mission. We are optimistic but know with the uncertainties of health care we will face more challenges, especially as the growing number of poor and disenfranchised patients we serve increases disproportionately to the fully insured patient.”
Dignity Health is the largest non-government provider of Medi-Cal services in California. To supplement Medicaid payments, like many California hospitals and health systems, Dignity Health receives California Provider Fee payments. In FY 2018 these payments provided income of $447 million plus an additional $217 million of catch-up related to FY 2017. The FY 2017 amounts could not be recorded earlier pending government approvals. Even after the inclusion of the provider fee and supplemental payments, Dignity Health’s unpaid costs of Medicaid/Medi-Cal was $556 million, which includes the FY 2017 catch-up payment.
Investment income was $448 million primarily due to strong equity markets during FY 2018.
Net income is reinvested in the organization. In FY 2018, capital expenditures of $543 million covered project costs for digital and information technology, medical equipment, continued seismic upgrades, and new patient facilities.
Important balance sheet related financial metrics, such as cash to debt and debt to capitalization also improved as of June 30, 2018 compared to prior years. Morissette added, “Our balance sheet continued to strengthen, and cash flows were solid, as we remain focused on further enhancing the long term financial viability of our enterprise and honoring our commitments to the many communities and constituents we serve.”
Key Organizational Issues
Dignity Health successfully completed the second year of its multi-year operational improvement plan to adjust its revenue and cost structure to meet the changing demands and reimbursement trends in the health care marketplace. Initiatives across the organization have been implemented to identify and adopt best practices and standards for care delivery. Dignity Health made strategic investments in patient and population health management and to enhance the patient and provider experiences. As a result, hospital metrics have improved.
Dignity Health continues to create partnerships that deliver the right care to the patient in the right place:
- In December 2017, Dignity Health and Catholic Health Initiatives signed a definitive agreement to combine ministries and create a new, nonprofit Catholic health system. The combination brings together two leading health systems, allowing the organizations to expand their mission of service and create a healthier future for people and communities across 28 states.
- In January 2018, it was shared that Dignity Health is among the first health systems to partner with Apple on its Health app, which supports medical records integration and allows consumers to view their medical records from a variety of providers and insurers on a smart phone.
- In February 2018, Select Medical Holdings Corporation (NYSE: SEM) and Dignity Health completed the transaction to combine Concentra Group Holdings, LLC, with U.S. HealthWorks to form a larger company to provide high quality, cost-effective occupational care nationally. Dignity Health contributed its 100 percent ownership of U.S. HealthWorks to the new, combined organization in exchange for a 20 percent ownership interest in the combined entity. In addition, Dignity Health received a one-time cash distribution of over $500 million and recorded a one-time gain of $120 million.
- In March 2018, in collaboration with the city of San Francisco, University of California San Francisco, and Crestwood, Dignity Health announced the opening of the San Francisco Healing Center, a 54-bed facility at Dignity Health’s St. Mary’s Medical Center. The facility is designed to address the city’s mental health inpatient needs and support some of its most vulnerable community members.
- Dignity Health added a 40th acute care hospital, Arizona General Hospital in Laveen, Arizona, to its integrated network to improve patient access to care in the local community.
Dignity Health’s organization-wide strides in sustainability include a 34 percent waste diversion rate as well as a 33 percent reduction in greenhouse gas emissions per square foot since 2010, despite adding 20 percent more square footage.
- In a four-month period of time the company introduced paper straws and wooden stirrers to replace plastic versions in the cafeterias of all of its hospitals. The elimination of the straws and stirrers alone has reduced Dignity Health’s use of plastics by 11,000 pieces a day, which adds up to approximately 4 million pieces of plastic per year.
- In May 2018, 14 Dignity Health hospitals across California received 17 Practice Greenhealth Environmental Excellence 2018 Awards–industry honors for their achievements in sustainability in health care. The awards recognize achievements in several areas including purchasing, chemicals, food, waste, energy, water usage, and climate change.
About Dignity Health
Dignity Health, one of the nation’s largest health care systems, is a multi-state network of 10,000 physicians, more than 60,000 employees, 40 acute care hospitals, and 400-plus care-centers including neighborhood hospitals, urgent care, surgery and imaging centers, home health, and primary care clinics. Headquartered in San Francisco, Dignity Health is dedicated to providing compassionate, high-quality, and affordable patient-centered care with special attention to the poor and underserved. In FY 2018, Dignity Health provided $2.1 billion in charitable care and services. For more information, please visit our website at www.dignityhealth.org.