Financial Report

In fiscal 2011, Wellmont Health System continued to improve our financial strength and position ourselves for future growth and success in a new healthcare era. Many of the gains realized for the year were driven by increased volumes, in part due to the successful integration of strategically important physician practices. Improvements in the performance of our investments also factored into the year’s success.

Our physician organization experienced substantial growth with the acquisitions of Cardiovascular Associates – the region’s largest and most experienced cardiovascular practice – in May 2010 and Pulmonary Associates of Kingsport – that city’s premier pulmonary practice – in January 2011. These acquisitions helped increase physician office visits by 20 percent over fiscal 2010.

Hospital inpatient and observation patient volumes rose 3.9 percent. Surgical volumes increased by 2.3 percent and outpatient visits by 3 percent. However, we experienced declines in newborn deliveries of 8.1 percent and emergency room visits of 1.9 percent.

Revenues increased $70.3 million over fiscal 2010, largely due to volume increases. An increase in bad-debt expenses is reflected in revenues, a result of continuing challenges presented by local economic conditions. Also reflected in our revenue totals is a $19 million TennCare fee assessment reimbursement. However, the initial fee is also reflected in our expenses.

Expenses for fiscal 2011 increased $75.9 million over fiscal 2010. Contributing substantially to this increase was $39.5 million in expenses due to acquisitions, $19 million in the TennCare fee assessment noted above, an $8.3 million increase in supplies – primarily for surgical implants and chemotherapy drugs – and a $6.2 million increase in salaries and benefits for increased patient care staff and computerized provider order entry and electronic health record implementation.

Our income from operations in fiscal 2011 was $17.2 million. While less than fiscal 2010’s $22.8 million, improved investment income and other nonoperating items resulted in revenues and gains exceeding expenses and losses by $28.2 million as compared to $18.2 million the previous year. This net income, a $42.2 million improvement in the market value of our investments and other items, translated to a $75 million increase in net assets.

Our days cash on hand remained relatively unchanged at 153 days, and our debt service coverage improved to 2.73 times our maximum annual debt service.

This strong financial position provides the resources we need to continue investing in the technologies and infrastructure our patients, physicians and employees expect and deserve.

Audited Financials

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