Hospitals across Los Angeles County saw an average 2 percent drop in net patient revenue last year while the average amount the institutions charged patients for health care services increased 1 percent, according to a Business Journal analysis.

There are 77 acute care hospitals on each of two Business Journal lists this week – one ranked by net patient revenue last year, and the other by number of staffed beds.

A total of 30 reported increases in net patient revenue – what hospitals actually collect for healthcare services rendered – while 34 posted declines and the rest were either new to the list or unchanged, based on Business Journal estimates.

53 of the listed hospitals reported a boost in gross patient revenue, the term for what providers charge for health care services – although not necessarily what they collect.

The average operating margin for the 77 hospitals on the list was 2.1 percent for 2017.

“These sound like impressive numbers, but the margins are incredibly small – just based on the sheer cost of running a hospital, especially a teaching hospital,” said Jennifer Bayer, vice president of external affairs for the Hospital Association of Southern California, which has 94 member hospitals. “These are very expensive hospitals to run.”

None of the facilities compare with Cedars-Sinai Medical Center, which ranked No. 1 on both Business Journal hospital lists.

The Beverly Grove hospital has 885 staffed beds – 250 more than the No. 2-ranked L.A. County-USC Medical Center in Boyle Heights, and 437 more beds than third-ranked Ronald Reagan UCLA Medical Center in Westwood.

Cedars-Sinai took in $2.9 billion in net patient revenue, down from $3 billion in 2016, while posting $16.2 billion in gross patient revenue, up from $14.8 billion the prior year. Its operating margin was 10 percent last year, down from10.9 percent in 2016.

The gains in revenue for Cedars-Sinai came in part on an increase in affiliations and ties to health care providers across the region. That has meant absorbing some primary care doctors and medical groups into its Cedars-Sinai Medical Network.

Those efforts included buying Marina Del Rey Hospital, joining forces with Torrance Memorial Medical Center, and linking up with UCLA and Select Medical to open the California Rehabilitation Institute.

Meanwhile, Cedars-Sinai maintains an extensive portfolio of medical research, ranging from cancer and neurosciences to women’s health, transplantation, stem cell science and other fields.

“Our drive to serve the greater community also is reflected in our ongoing community benefit programs that seek to improve the health of neighborhoods across the Los Angeles region,” Cedars-Sinai said in a statement.


Affiliations and expansions of service into new areas with off-campus efforts are trends in healthcare throughout the region. Various hospitals have opened urgent care clinics, and some are forming more partnerships with clinics and physician groups, Bayer said.

Adventist Health, which runs White Memorial Medical Center in Boyle Heights and Glendale Adventist Medical Center, has opened four urgent care centers from Montrose to Boyle Heights over the past two years, with nods to the organization’s religious roots as well as the budgets of patients.

“Our patients are sensitive to cost, as are employers,” said Dr. Arby Nahapetian, chief medical officer for Adventist in Southern California. We are very conscious about designing care that is affordable in a new health care environment.”

For Providence St. Joseph Health, which runs six hospitals in L.A., long-term strategy involves strategic partnerships, community clinics and digital health services that link to patients on their mobile phones.

Providence Little Company of Mary Medical Center in Torrance teamed up with City of Hope to build an $80 million, 106,000-square-foot outpatient clinic at the old Daily Breeze site in Torrance. A pending $542 million makeover of Providence Tarzana will include a $40 million outpatient space.

“We’re going to continue to focus, and be more focused, on the ambulatory environment,” said Erik Wexler, chief executive of its Southern California division. “We want to be out in the community where people live, with access to physicians close to home.”

Keck Medicine of USC last year expanded with four new clinic locations, including the 120,000-square-foot Norris Healthcare Center.

“The demand for Keck Medicine’s highly-specialized, complex care is driving these exciting growth opportunities,” said Tom Jackiewicz, its chief executive, in a statement. “We predict an increase in outpatient volume, especially in the San Gabriel Valley, with a scheduled opening of a 33,000-square-foot location in Arcadia featuring five specialty centers.”

Possible headwinds

One major concern for hospitals is the possibility of changes to the Affordable Care Act and the health insurance it provides to needy residents.

Another is state Assembly Bill 3087, a proposed measure to reduce health care costs by giving the state control over prices for hospital stays, doctor’s visits and other services covered by commercial insurers.

“It would create a public utility out of hospitals that would impact 175,000 jobs across the state,” Bayer said. “Hospitals would close.”


A Business Journal list of the top health insurance providers showed steady growth in enrollment among the top 10 companies ranked by enrollees in L.A. County.

L.A. Care Health Plan, based downtown, took the top spot on the Business Journal list with roughly 2.2 million enrollees; it had companywide revenue of $8.8 billion. It was followed by Kaiser Permanente (1.2 million enrollees), Anthem Blue Cross (1.5 million) and Health Net Inc. (1.5 million).

Blue Shield of California, which ranked No. 5. Blue Shield also acquired No. 7 ranked Care 1st Health Plan, which has 377,000 enrollees and continues to operate as a separate entity for now.

“Blue Shield of California continues to grow its membership in Los Angeles County,” said Matthew Yi, a spokesman for the San Francisco’s Blue Shield, in an email.

For reprint and licensing requests for this article, CLICK HERE.