Financial Report

At Wellmont Health System, we are always seeking to find the best and most efficient ways to deliver the highest quality care to our patients. And no matter what form that care takes, we must remain financially strong to ensure we can fund new innovations, manage the trust our communities have placed in us and care for those in financial need.

So in fiscal 2012, we continued to position ourselves for future growth and success in what has truly become a new healthcare environment – and one that will only continue to evolve.

Our most significant gain for the year, a 15.9 percent increase in physician office visits over fiscal 2011, was due largely to the successful integrations of two strategically significant physician practices. Tri-State Cardiology became part of the Wellmont CVA Heart Institute in October 2011, further solidifying the heart institute’s position as the region’s premier cardiology group, and Blue Ridge Medical Specialists became part of Wellmont Medical Associates in January 2012, strengthening Wellmont’s oncology, pulmonology and endocrinology service offerings in the region.

Other important developments factoring into the year’s success included improvements in hospital productivity, with hours per adjusted discharge decreasing by 6.7 percent. With an enhanced focus on case management, length of stay across the system is also trending lower. Patients benefit as well when we can get them out of the hospital and back to the comforts of home more quickly.

Aside from visits to our physician offices, other volumes for the year were mixed compared to fiscal 2011. Because of continuing changes in managed care, observation patient volumes rose 5.5 percent while inpatient volumes declined by 6.3 percent. Outpatient volumes were up 2.3 percent for the year, though emergency department visits were down 1.9 percent. Newborn deliveries increased by 6.7 percent, and surgical volumes were also up 4.2 percent.

Net patient revenue increased $12.2 million over the prior fiscal year. Other revenue increased $18.1 million, primarily as a result of incentives associated with Meaningful Use implementation of the electronic health record. However, purchasing and implementing the systems necessary to achieve Meaningful Use brought significant expenses, including approximately $13 million of capital costs, $5 million of annual depreciation and maintenance costs and $4.6 million in implementation staffing costs.

Salaries and benefits increased $21.6 million for the year, in large part due to the physician practice acquisitions noted above. Supply expenses rose by $3.8 million, primarily because of growth in infusion volumes.

This year’s income from operations of $22.3 million exceeded fiscal 2011’s income from operations of $17.2 million. And our net income of $39.8 million exceeded the $28.2 million realized the prior year. These funds are reinvested in healthcare advancement to meet the needs of our communities.

Our debt-to-capitalization ratio improved as a result of strong operating performance, which combined with strong investment returns to increase our cash on hand.

Wellmont’s mission is to provide superior health care with compassion. It is a mission on which we remain singularly focused. And our continued financial strength is vital to accomplishing that mission while remaining adaptable in this changing healthcare landscape.

Audited Financials

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