Carolinas HealthCare System reported a loss of $112 million in the first six months of the year, due to losses in investments.
Officials presented the financial report at Tuesday's quarterly meeting of the CHS board. They compared the early 2008 loss to earnings of $137 million at this time last year.
It was the second straight quarter of losses, but Greg Gombar, chief financial officer, said it will not affect the operations of the region's largest hospital system.
“We don't run our business depending on the investment results,” Gombar said. “That's for the long-term capital plan. Over the long-term, we're still going to expect a return of 7 or 8 percent, which we have.”
Income from operation of Carolinas HealthCare, the parent of Carolinas Medical Center in Charlotte, was also down, by 39 percent. Operating income through June was about $28 million, compared to $45 million after six months of 2007.
Chief financial officer Greg Gombar said the income drop was due primarily to interest of $21 million paid on a $600 million bond issue from 2007 and additional depreciation of $28 million on a million square feet of patient-care space that opened late last year.
The hospital system's revenues rose by 33 percent in the first six months of 2008, to nearly $1.5 million, from $1.1 billion at the end of June 2007. Gombar attributed 22 percent of that increase to the merger last year with NorthEast Medical Center in Concord (now called Carolinas Medical Center-NorthEast).
Personnel costs increased by 35 percent, due to the addition of CMC-NorthEast, the opening of Levine Children's Hospital and a new intensive-care tower at CMC, and the addition of doctors to CMC's faculty, Gombar said.
As a public not-for-profit organization, Carolinas HealthCare retains its earnings and reinvests them in new programs and capital projects. The system is among the nation's largest health-care organizations, with hospitals, medical offices, nursing homes and other medical offices in both Carolinas.
CHS spent $361 million on capital projects in 2007, the highest ever for a single year. And the organization expects even greater capital expenditures this year, according to Gombar's report.
The hospital system recently won state approval for a $174 million expansion of CMC-Pineville, an $85 million replacement hospital for CMC-Lincoln, $43 million in operating room projects at CMC-NorthEast and Carolinas Medical Center in Charlotte, and four freestanding emergency rooms (also called healthplexes) in Waxhaw, Harrisburg, Kannapolis and in the Steele Creek neighborhood of Charlotte.
In other business Tuesday, the CHS board approved plans to build a 40-bed rehabilitation center on the campus of CMC-NorthEast. Beds will be moved from three other facilities – 10 from Carolinas Rehabilitation, 20 from CMC-Mercy, and 10 from Stanly Regional Medical Center in Albemarle, which formed an alliance with CHS last year. The new rehab center will serve residents of Cabarrus, Rowan, Stanly and Iredell counties and will be similar to the Mount Holly outpatient rehab center that opened last October.