Aurora reports total revenue increase, profit decline in 2015


Aurora Health Care’s operating income was down 8.1 percent in 2015 compared to its 2014 margin, but the hospital system increased total revenue by roughly $214 million, according to financial information released Tuesday.


Aurora posted $4.93 billion in revenue in 2015. After deducting expenses, it had an operating income of $462 million, down slightly from $503 million in 2014.

Compared to 2014, Aurora’s Chief Financial Officer Gail Hanson said the system’s financial performance was “not dramatically different.”

“Our volumes were up, but our expenses were up as well,” she said.

Aurora’s expenses increased by more than $254 million in 2015. The spike was largely driven by higher medical supply costs and increases in salaries, wages and benefits.

Aurora paid $110.4 million more for supplies and $90 million more in salaries, wages and benefits in 2015.

In addition, a $36.8 million lump-sum pension payment to employees who had vested benefits also shaved a chunk from Aurora’s operating income.

Hanson said the vast majority if its $462 million in operating income went toward $296.7 million in capital improvements as well as $60 million in net debt payments.

“We have a lot of bricks and mortar, so just the dollars to keep our facilities up-to-date is a pretty big capital expense,” said Gail Hanson, Aurora’s chief financial officer. “Our capital expenditures were $296.7 million (in 2015), and that’s up from $172 million (in 2014).”

In 2015, Aurora spent $6.55 million on renovations at four facilities in Milwaukee County alone, according to building permits filed with the county last year. In total, Aurora has 15 hospitals, more than 150 clinics and 70 pharmacies in 30 municipalities in eastern Wisconsin and northern Illinois.

The hospital system is currently building an ambulatory surgery center and clinic in Burlington and converting its administrative office building in Germantown into an outpatient surgery center. Aurora is also working on plans to expand in Marinette and Sheboygan.

“As with 2014, I think the results continue to be better than expected,” Hanson said of Aurora’s financial performance. “These results are better than industry medians. There are a number of factors that are coming into play to give us those good results. We just think that they’re very favorable results.”

Since the passage of the Affordable Care Act in 2010, hospital revenue has generally been increasing, according to Dave Jensen, editorial director at HC Trends. HC Trends tracks health care industry data.

“Hospitals are seeing an increase in revenue and the reason has to do with a couple things,” Jensen said. “One is you have more people in the Medicaid program. They move from being uninsured to Medicaid, and they can get care because they can afford it. And you also have the (ACA) exchange.

“What you’re seeing is a bunch of people who normally would’ve been uninsured getting care because it has become affordable. So for hospitals, they have this increase in revenue and they have a decrease in their charity care — what they used to write-off to take care of uninsured people. They have benefited a lot from that.”

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

Ben Stanley, former BizTimes Milwaukee reporter.

No posts to display