Corporate News and Events

Trinity Health Reports Solid Fiscal '03 Results

NOVI, Mich. –– Michigan’s largest health system, Trinity Health, Novi, Mich. today reported strong financial results for the fiscal year ended June 30, 2003, including double-digit increases in operating income and Community Benefit Ministry, along with maintenance of its favorable bond rating.

Operating and Net Income

For the fiscal year ending June 30, 2003, Trinity Health reported an audited operating income of $115.8 million, compared to $81.3 million* during the same period last year. The health system’s fiscal 2003 operating margin of 2.3 percent also is an increase over last year’s margin of 1.7 percent. Trinity Health’s operating margin is above average compared to other large Catholic health systems.

Higher patient volumes – increases of 1.4 percent in acute care admissions and 5.7 percent in outpatient visits – played a primary role in the growth of operating income. Improved revenue management, reduced losses on physician practices, and a continued focus on controlling non-labor supply expenses also factored into the increase.

Trinity Health reported an audited net income (also reported as Excess of Revenue over Expenses) for fiscal 2003 of $110.9 million, an increase of $5.2 million over the prior year. The growth in net income was dampened by a substantial reduction in investment income.

The system’s solid financial performance allows Trinity Health to continue fulfilling its mission – providing care for the poor and underserved – and to invest in the system’s services, people, and facilities.

The health system reinvests net income through:

1. a commitment to community health programming, charity care, education and research for our patients and community members,
2. operational improvement for enhancements to patient safety and clinical service delivery, and for maintaining competitive salaries and benefits, and
3. capital improvement for items such as information systems and service line technology.

Community Benefit Ministry

Trinity Health reported $438.4 million in community health care services during fiscal 2003, an increase of $60.4 million, or 16 percent, from the same period last year. Reported as Community Benefit Ministry, this group of services includes:

1. Ministry for the Poor and Underserved – activities and programs, $33.5 million; charity care at cost, $42.3 million; unpaid cost of Medicaid and other programs, $79.0 million, and
2. Ministry for the Broader Community – activities and programs, $34.8 million; education and research, $24.2 million; unpaid cost of Medicare, $224.5 million.

The health system also provides a significant amount of uncompensated care to its patients, which is reported as “provision for bad debts” and is not included in the Community Benefit Ministry figure. For fiscal ‘03, Trinity Health reported provision for bad debts of $180.0 million, an increase of 1.9 percent over last year.

Trinity Health will provide additional detail about its Community Benefit Ministry through the system’s Fiscal 2003 Annual Report, which is scheduled for release in late November.

Bond Ratings Remain Favorable; Outlook Remains Stable

Trinity Health’s strong financial performance in Fiscal 2003 convinced bond-rating agencies to reaffirm the system’s bond ratings. Fitch Ratings, Moody’s Investor Services, and Standard and Poor’s all rated Trinity Health 2003 debt as Aa3 or AA-, and judged its financial outlook as “stable.” These ratings were released prior to the issuance of $283.5 million in variable rate long-term debt in early November. Proceeds from the new bonds will be used to refinance prior existing bonds and to provide funding for capital improvement at facilities in California, Iowa, Michigan and Ohio.