Thursday, January 12, 2017

Mississippi Baptist Health Systems continues to post losses

Mississippi Baptist Health Systems continued to post operating losses in 2016.   The hospital system has suffered such losses four out of the last five years and Fitch revised its ratings outlook to negative last March.  Baptist revenue has increased but the system still suffered a $3.9 million loss that was nearly double projections.  However, that was an improvement over the previous two years that saw operating losses of $17 million and $29 million.  Baptist is also hurt by some gambling on variable rate swaps on bonds as well. 

 Baptist provides quarterly and annual financial statements  as part of its regulatory compliance for issuing bonds. The 2016 annual report is posted at the bottom of this post.  The annual report states:

For FY 2015, the Health System had a $32.1 million increase in total revenue, increased non-capital expenses of $17.1 million and increased capital expenses of $2.7 million. During FY 2015, MBHS acquired two critical access hospitals, Baptist Medical Center-Yazoo (BMC-Yazoo) and Baptist Medical Center-Attala (BMC-Attala) and opened the Baptist Heart Clinic. The addition of the two critical access hospitals resulted in $11.4 million in additional total revenue and $14.2 million in operating expense for FY 2015. The remaining increase in operating revenues can be attributed to inpatient and outpatient volume growth and revenue cycle stabilization during FY 2015. Excluding the critical access hospitals, total noncapital and capital expenses increased by only $5.5 million due to labor control and contract management....

This table shows year-to-date operating loss of $3.9 million and operating EBIDA of $38.2 million. Net operating revenue grew by 10.4% over prior year, and over the budgeted growth by $2.7 million. Actual inpatient volume as compared to budgeted volume for the Medical Center was under budget by 167 admissions but ahead of prior year. Outpatient volume has been above budget expectations and above prior year. Actual non-capital operating expenses are above budgeted expectations and above prior year. Actual capital related expenses are below budgeted amounts. This resulted in an operating loss of $3.9 million for the August 2016 year-to-date financial performance as compared to a budgeted loss of $2.1 million. The non-operating gain is $5.2 million versus the budgeted gain of $7.7 million and the $4.5 million gain in the prior year. Included in this line item are year-to-date realized investment gains totaling $19.3 million, unrealized investment losses of $14 million, and a $9.8 million negative change in valuation of the fixed payer swap transaction entered into in March 2007...

Some highlights of the 2016 annual report are:

*Admissions increased from 20,264 patients in 2011 to 21,868 patients in 2016.  Nice increase but it was 167 patients below projections (See Table 5 on page 7).  ER visits at MBMC showed positive growth while the average daily census dropped seven patient per day in five years.  However, the 2016 budget expected the daily census to be 302 patients instead of the actual 290 that was posted. 

*Revenue increased from $368 million in 2011 to $526 million in 2016 and exceeded projections.  However, expenses are hurting Baptist.  Salaries and benefits increased over $100 million in five years- $216 million to $331 million.  Baptist acquired two hospitals and opened a clinic so such increases are probably to be expected after such expansion.

*Baptist has posted an operating loss four out of the last five years:

2011: -$6.6 million
2012: $4.5 million
2013: -$22.7 million
2014: -$29.3 million
2015: -$17 million
2016: -$3.9 million

The budget expected losses to be $2 million in 2016.  However, the actual losses were almost double projections. The budgeted amount is in parenthesis.

*Mix of payors:
Medicare: 54% (56%)
Medicaid: 8% (8%)
Blue Cross: 15% (14%)
HMO/PPO: 14% (13%)
Private insurance: 1.5% (2%)
No Insurance: 7.7% (7%)

*However, there is one blight on the balance sheets of Baptist: Swaps.  Yup,  Baptist gambled with bonds that carried variable rates in 2007.  Note IX states:

On March 1, 2007 Mississippi Baptist Health Systems entered into a 67% of one-month LIBOR fixed payor swap with USBAG. The swap had a notational amount of $80 million (Series 2007B bonds) and is fixed at 3.759% for a term of thirty years.

As a result of the 2010 Fitch downgrade to “BBB+” by Fitch Ratings, earlier in 2013, UBS requested that Baptist post collateral on the value of the swap agreement, in accordance with our swap agreement executed with the Series 2007 debt issuance. On April 29, 2013, Baptist entered into a swap novation agreement with Deutsche Bank. The agreement calls for Deutsche Bank to post $5M of collateral at the “BBB” rating level, by Fitch ratings with a net interest cost of 6.25 bps on the $80M swap. As of August 31, 2016, the Health System has posted collateral of $27,033,239, an increase of $22.6 million from August 31, 2015.

As of August 31, 2016, the valuation of the swap was a $31.1 million liability, an increase of $9.8 million from August 31, 2015. This is reported on the balance sheet in other long-term liabilities.

The hospital system also issued another $80 million in variable rate bonds in 2009 as well.  Variable rates bonds do not have a fixed interest rate that is amortized for the term of the bonds.  Baptist essentially bet against the market with a variable rate.  When the bond gods are kind to Baptist, the system makes more money from the bonds.  However, the system loses money when interest rates go the wrong way.

*Baptist owes $12 million on bonds issued to finance the construction of the Madison site.  The interest rate was fixed at 2%.  However, the bonds were issued in 2006 and supposed to mature in 2012 but were refinanced.  The original bonds had a variable interest rate.

However, Fitch had a few things to say about Baptist's finances when it revised the outlook for Baptist to negative (Keep in mind that this statement is based on 2015 results):

 The revision of the Outlook to Negative is driven by MBHS's failure to stem the sizeable operating losses of the last three years. Recent losses are related to the difficulties with MBHS' current Paragon Electronic Health Record (EHR) installed in 2014, which has been a barrier to implementing certain efficiency initiatives. The acquisition of two critical access hospitals (CAHs) and other unbudgeted expenses also contributed to MBHS' suboptimal performance in 2015. While improved over prior year, MBHS' operating results failed to meet budget in fiscal 2015 (year-end Aug. 31) with a $23.4 million operating loss (negative 5.1% operating margin), and continue to trail budget at a negative 3.4% operating margin through the three-month 2016 interim period ended Nov.30 2015....

 Fitch issued its press release on March 1, 2016.  It rated the MBHS's bonds at BBB.

Kingfish note: Notice the date of the annual report: twelve months ending August 31, 2016.  Baptist announced the next day it would collaborate with Baptist Health Systems in Memphis.


Anonymous said...


Anonymous said...

Watch the movie The Big Short on Netflix.

Anonymous said...

If only Baptist had a Children's Hospital that received lots of donations it could annually suck dry to cover its losses.

Anonymous said...

Can someone show Chris Anderson where they keep the pension money? He'll get this fixed in no time.

Anonymous said...

The bonds aren't as risky as the swap. Interest rate swaps are simply a money maker for bankers, advisors and lawyers. Hospitals need to stay out of the arbitrage game.

Anonymous said...

Ask almost anyone who works there. It does not come as a surprise that they lost money. Their retirement system does the same thing.

Anonymous said...

employee costs have increased how much?

looks like its time for the entire place to take a 30% cut in pay.

Anonymous said...

Do they add in contract work in with employee costs? Too many employees cannot do their job and contractors have to be hired to do their job. This does give some people at Baptist the chance to make some extra spending money off the contractors. Just ask the one man who received a new truck the day after giving a certain company a contract.

Anonymous said...

As a vendor to this hospital, I'm not surprised. They are difficult to work with and dismiss cost savings iniatives routinely, usually because it takes a little work to employ. Not to mention, Group Purchasing Organizations (GPO) work to protect high volume vendors, and their profit margins. Free market, capitalistic purchasing policies do not exist in healthcare. This needs to change.

Anonymous said...

As far as the Madison campus goes, it was the subject of a tax problem with Madison County. They contended for years that it was a hospital, which was not true. I understand they had to fork over $500,000 in back taxes.

Anonymous said...

cut employee salaries and refuse medical care to those without insurance.

Anonymous said...

Don't know a lot about how hospitals operate but upon returning home to SC after 15 years in MS I was shocked. Hospitals in the Greenville and Columbia markets have consolidate big time. In Columbia Richland Memorial (county hospital) Baptist and University have merged into Palmetto Health a six hospital system. In Greenville the Greenville Hospital System now has 11 hosptials and is searching for more.

The buzz word is hospital consolidation to save cost. patient care seems to be lost in all of this. The Greenville project is working to take out all legislative input into all the process in order to speed up the process and have less interference.

God help us.

Anonymous said...

Let's look at the facts---Baptist has several million dollars worth of property on Lakeland ($7,000,000+)---Hwy 49 Richland ($5,000,000)---Madison ($8,000,000) and they won't sell any of it. There is a certain person that handles the real estate for Baptist and it's obvious that he does not have a clue. The Board is full of talented Real Estate developers and I don't understand why they can't get a handle on this situation.

Baptist and St. D suck at patient care.

Anonymous said...


Anonymous said...

10:35, I have seen the Baptist hospital refuse to treat people before. One man was on his way to the hospital in an ambulance. When the ambulance got to the Baptist the driver was met at the emergency room door and told to take the man to another hospital. They refused to allow the man inside of the hospital. The man died on the way to another hospital.

Anonymous said...

I wouldn't worry about Baptist's profitability, the President Elect has promised that this health-care thing will be fixed very easy and quick.

Anonymous said...

Medicare cuts are killing healthcare. The volume of patients is going through the roof and Medicare is wacking reimbursement left and right. While adding on tons of regulation and auditing to claw back whatever they paid in the first place.

Anonymous said...

With the end of Obamacare and Medicaid and soon to come voucher program for Medicare they should not have any difficulty reaching a $30 million per year loss in 2018.

Y'all Lissen Up!.. said...

4:10 - Nobody cares to read verbose comments about problems with zero mention about solutions. Did you know that before you read my post?

Anonymous said...


You're adorable. The only option is to opt out of medicare or bust your ass to increase your rating for a more favorable reimbursement rate.

Which one do you see happening?

Anonymous said...

While St. D is laying people off

Anonymous said...

I have worked there in the past...and all I can say is that "THE LORD WORKS IN MYSTERIOUS WAYS", especially at MBMC!!! I don't trust Baptist management any further than I can throw them.

Anonymous said...

Chris Anderson left a huge mess on the coast. He should be in jail

Anonymous said...

and for at least the past 4 years, they have had a construction / renovation project of some type going on at their campus. While they may be reporting a loss, they sure aren't sweating it. Admin heavy and and growing.

Canton For Top Notch Treatment.. said...

The continual construction, the facade of the cancer center and the new entrance to the left, rear are all simply tricky gimmicks to make us think the place is profitable and a preferred destination venue for sick people.

Take Me To Ruleville.

Anonymous said...

Baptist will be fine. All hospitals are losing money. Baptist is pursuing a merger to consolidate, St D's is a prime buyout target, only 1 of the 5 Merit hospitals makes any money and all 5 are for sale. UMC is in a different category as they are state supported (which makes them bloated and inefficient). Across America probably 1/4 of the hospitals open today will either merge or close in the next decade. Baptist's strength is its clinic network (to feed the hospital). St D's realized late that this is what they needed so they bought MEA. Now St D racing to build a primary care referral base to keep the mothership open. Somebody mentioned quality of care... Baptist and St D deliver the highest quality in the metro area. River Oaks is really just a procedure center for the docs that operate there to get richer. Or maybe you were saying Merit Central was better?

Anonymous said...

The entire medical industry must be reorged for the US financial system to survive. Read Karl,, on this and ignore on your children/grandchildren's own peril.

Anonymous said...

If it weren't for the swap loss (which leadership owned up to and took the heat for), MBHS would have posted a profit. Either way, they made a HUGE swing to the good this past year. They continue to be awarded for safety, quality, patient care. Why all the vitriol? I've had family there as patients. I've had major surgery there. The positives about Baptist far outnumber any negatives. How many people who are familiar with the treatment at all the metro hospitals would choose to go anywhere else but Baptist if they had a choice?

Waves Hand Loudly.. said...

2:27; Do you see me waving my hand over here? I've undergone major procedures at UMC, Baptist, St. Dominic and what used to be River Oaks but is now Merit. I've never been to the one on I-20 and would never set foot in the one in Canton.

But, given a choice, I would not allow anybody to take me anywhere other than St. Dominic.

Baptist In Madison Rocks said...

Some three years ago, or thereabout, Baptist in Madison moved it's medical clinic from the big intersection on the interstate to downtown Madison just east of McAlisters, at the corner of Old Canton Road. Really big, nice clinic with receptionists behind sliding glass and magazines and stuff and a handicap-button to make the front door open. They must be doing something right.

Anonymous said...

As KF noted. MBHS is 'collaborating' with Baptist Memorial in Memphis. In due time, we all will understand this to actually be a merger with Memphis making the decisions.

Anonymous said...

When vendors try to work with them on reducing cost, they won't even consider it. Why?

2016 Hottest Reporter Poll

Suscribe to latest on JJ.

Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel

Who is the hottest reporter?


Who is the Hottest Reporter in Jackson?

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS