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Quarterly financial update: Strong performance continues

17 Feb 2019

Profit higher than forecasted

By: James Parr, chief financial officer

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Salem Health’s financial performance has again exceeded expectations. Here are the two critical numbers relating to profit, or EBIDA, which stands for Earnings Before Interest, Depreciation and Amortization: Our profit year-to-date is 12.2 percent compared to the forecast of 11.8 percent — so that’s great news! We’re ahead of projections.

EBIDA is the profit we make each year, so we can re-invest in better health care for our community. This margin must fund the health care needs of a growing, aging community through improved facilities and health care innovations. As a not-for-profit organization, we have no shareholders — so 100 percent of our profit is re-invested in our community.

Key facts from second quarter of FY 2019

Our profit margin was again mainly due to higher patient volumes. In fact, we had a record census at 456 in January! This resulted in $26.5 million EBIDA, which exceeded our forecast by $1.7 million for the second quarter ending in December. This brings our year-to-date EBIDA to $50 million, exceeding forecast by $2.8 million.

Some insight on our investments in general: Over the long-term, Salem Health maintains diversification across multiple investment types to shield against market volatility like we have seen.  Historically, we’ve earned 7 percent annually over 10 years, compared to our goal of 5.5 percent annual return. Again, more good news.

Nevertheless, we are staying vigilant. Areas we’re working on that may interest providers include: 

  1. Real-time visibility: Department leaders are now testing their “real time” fiscal visibility tools.  This gives us daily clarity, so we can make faster course corrections, rather than waiting for monthly reports. This will help us avoid the type of financial event we faced last fiscal year.
  2. Matching staff to patient need: This continues to be a daily struggle. Making sure we don’t over- or under-staff tends to be more critical when patient volume drops. We also face the problem of having the “right” staff. For example, sometimes higher-paid RNs are doing CNA work because of shortages.