Norton Healthcare Posts Stable Fiscal Performance in 2007; System Contributes Record $71 Million to Support Charitable Care, Education and Community Services
LOUISVILLE, KY. (July 18, 2008): Norton Healthcare posted stable fiscal performance in 2007, as the not-for-profit health care system continued to heavily reinvest in the organization while contributing a record $71 million to support charitable care, education and community programs and services.
Norton Healthcare’s 2007 fiscal performance included a $22.5 million, or 1.9 percent, patient service margin (financial result from the system’s core business, patient care services). Officials said the 1.9 percent margin reflects stable performance despite fiscal pressures caused by declining reimbursements from managed care and government payers; escalating costs for facilities, technology, salaries and supplies; increasing costs to treat uninsured and underinsured patients; and other factors.
“Norton Healthcare’s stable fiscal performance is allowing our organization to expand services, fund new facilities and technology, and provide charitable care and educational support consistent with our not-for-profit mission,” said Stephen A. Williams, president and chief executive officer. “Our continuing stable fiscal performance, along with enhanced philanthropic support, is crucial if we are to achieve the growth necessary to meet the significant health care needs of our community and region.”
Williams said Norton Healthcare’s new five-year strategic plan requires considerable resources to fund new services, facilities and technology across the region – needs that will be met only through continued solid fiscal performance and increased philanthropic support.
Norton Healthcare officials said the organization continues to reap the benefits of recent investments in facilities, technology, clinical information systems and employees, along with expanded services. “This has allowed our health care system to provide patient care more efficiently and have more resources to reinvest in the organization,” said Russell F. Cox, chief operating officer. “In fact, since Norton Healthcare doubled in size in September 1998, we have invested $509 million in system facilities, equipment and technology to better serve our community.”
The system’s audited financial numbers for its 2007 fiscal year (January through December) included these highlights:
- Norton contributed a record $70.8 million “community dividend," comprising charitable care, discounted services, community programs and services, and educational programs support. In 2007, Norton Healthcare provided some $21.6 million in direct support to the University of Louisville, and over the past 10 years has provided a total of $119 million to support U of L. Over the past five years, Norton has contributed a total community dividend of $322.6 million.
- Norton provided free or discounted health care services to nearly 61,000 uninsured patients in 2007 – some $58.6 million worth of services provided, or more than $160,000 each day.
- Norton Healthcare recorded a positive $79.6 million in operating income (the system’s bottom line is composed of patient service margin plus investment income) in 2007, including $22.5 million in patient service margin and $57.1 million in investment income. This represents the fifth consecutive year that Norton Healthcare has posted positive operating income. Norton experienced improvements in net revenues, cash reserves, days cash on hand, total assets and other important fiscal indicators.
- Norton recorded $3.4 billion in gross revenues and ended 2007 with $1.6 billion in total assets.
- Norton's net revenues grew by $30.4 million, or 3 percent. Since 1998, Norton's net revenues have grown from $417.9 million to $1.18 billion in 2007, an increase of
182 percent.
- Norton grew its cash reserves by $48 million to $588 million.
- Norton improved its days cash on hand to 218 days. Since 2003, the system’s days cash on hand has grown from 155 days to 218 days, a 41 percent improvement. Days cash on hand is a key indicator of an organization’s fiscal strength.
- Norton realized $57.1 million in investment income, compared with $34.4 million in 2006.
- Norton recorded a record $22.2 million in private philanthropic support through the Children’s Hospital Foundation, Norton Healthcare Foundation and Kosair Charities.
"Over the past five years, Norton Healthcare has been able to improve its fiscal performance and heavily reinvest in the organization, while still adding hundreds of employees and $171 million in payroll to our organization,” said Michael W. Gough, senior vice president and chief financial officer. “We are very encouraged by our stable 2007 fiscal results and we will continue to work hard to ensure that we have the resources necessary to reinvest in our organization to help meet important community health care needs.”
Gough added that the health care system’s fiscal performance in the first two quarters of 2008 for patient service margin exceeded 2007 results.
Cox said the organization’s solid fiscal performance has helped meet some community health care needs, but that private philanthropic support remains a focus for the non-for-profit health care system to meet important growth needs. “Like all health care systems, we are challenged by declining reimbursements, escalating costs and significant capital needs to meet the health care needs of our community,” Cox said. “Continued improvement in our philanthropic support will be essential if we are to continue to grow to meet the health care needs of our communities, consistent with our not-for-private mission.”
According to Williams, the organization’s continuing stable fiscal performance “makes Norton Healthcare the best-positioned health care organization in the Louisville area for growing and going forward successfully. We believe that Norton Healthcare has clearly established itself as the health care employer and provider of choice in the Louisville region as we continue to build a stronger, mission-focused organization.”
