Today I dive into my notebook from the JP Morgan 2022 Conference. We look at Ascension, Intermountain and Advocate Aurora. Hope you enjoy.
Today in health, it JP Morgan diving into the presentations a little bit. My name is bill Russell. I'm a former CIO for a 16 hospital system and creator of this week in health. It instead of channels dedicated to keeping health it staff current and engaged.uip you and your staff in the:
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11:00 AM Pacific. For the full webinar. You can register now at this week. How's dot com slash trenches, or you just go to our homepage. This we call.com. Click on the webinar itself. All right. Last week we took a look at the high level themes from the JP Morgan conference today. I comb through my notes to prepare for this Friday's keynote interview with Rob D Ms. Shea.
Former CFO for UPFC where we are going to explore the conference together. , leading up to that keynote, you're going to get my rundown on what I heard from several health systems about 20 houses, some CEOs and CFOs presented. Their strategies and results at this year's JP Morgan conference. And there's some interesting tidbits to be found in the individual presentations.
Before we get there, some of the themes in recap or the word headwinds heard the word headwinds, a fair amount. It was used commonly to describe the, the increase in labor rates. , the pandemic COVID. , inflation.
, these are the kinds of things that are buffeting, the results of the health systems. , Regardless, extremely good returns in the market means that balance sheets looked really good. , even when operating income may not have been that good. Although, I will say that the operating margins were as high as I can remember in any of the previous JP Morgan conferences.
, diversification was a big theme. As was value-based contracts and care, , partnering to accelerate transformation. Was a continued theme. As well. , that's where they carry over from last year. All right. So what I'd like to do today is dive into a couple of the presentations and that's what I'm going to do the remainder of the week. Just.
Give you some of the highlights from my notes on the specific presentations, the first one, I'm going to talk about advocate Aurora health. , Jim Scottsburg is the chief executive officer. I mentioned last year that their system was putting together scorecard.
And I was really looking forward to seeing that scorecard. And then when I saw it, I realized. , the deficiency in the scorecard was not having enough. Information to really decipher the scorecard. Right? So operating margins pretty straight forward, 4.7% revenue, 10.3 billion. , team member engagement, 83.
Again, I don't know what that means. Diversity equity inclusion, 50. Consumer experience one 17 patient experience, 73 safety and health outcomes. 1 0 8. Now I'm sure that means something that is a really cool scorecard. It means something to their health system, , but to someone without the context,
It doesn't mean a lot, except they put some numbers in green and some numbers and red. , but other than that, it's really hard to read a scorecard like that. So, , again, context is your friend and data presentation is your friend. They touted their value based care success. They have about 250,000 covered lives.
, they have a shared savings program that made up about 46% of their, revenue. If I'm reading this correctly. , which is a pretty significant amount of money. , only 54% came from. A fee for service. So. , that's going to be recurring theme. I want to come back to that when we talk about, , Intermountain and we talked about essential as well, because there's that back and forth that I touched on before.
And, , again, just seems to be a theme that health systems that I have made this push can get there. And I'm going to come back to why that is. , key leverage, metrics. Again, you're going to hear this over and over again. , cash to debt ratios are generally going down that service coverage generally going down on the case of advocate Aurora, but in most cases,
A day's cash on hand generally went up. Except in the case of advocate Aurora, in which case it went down. , I'm going to assume that they made some significant investments. . , nothing else really from the presentation stuck out to me. I, again, I'm trying to focus it on the intersection of technology and health and, , Again, nothing, really, nothing really popped for me on this presentation. So, , the next one was Intermountain. Intermountain's always a very.
Interesting presentation, very well-run organization. They are expanding. They're growing. , they. , , always give me something to think about one of the slides they threw out there was life expectancy. , has tumbled the most since world war II.
, that was just an interesting slide for me to read and it's good. , to spark conversation among people, as we talk about healthcare. So, , United States overall went down 1.87. White Americans. 1.36 black Americans, 3.2, five years. And is Spanic Americans. Won't be down 3.8, eight years.
So it's interesting sort of points to, , health disparities also points to the impact of the pandemic across the board has been pretty significant. , , as they go into their performance, I mean, just every number is impressive.isits with clinicians went up:
, they also had reduction in ed visits during the S D O H demonstrations. , social determinants of health. , 13%. And they had a, , individual market premiums over three years, went down 6%. So that's impressive as well. They acknowledged as well as everybody else said it. I can't believe I've skipped this other theme.e plan, personal expenses for:
, that was a big number. They introduced permanent flex work model for nonclinical caregivers. Again, just being creative with what we're doing with our employees. , Intermountain is one of those organizations that stays ahead of the curve. And , that's one of the reasons we looked so closely at this presentation.
They, , they're looking at, , upskill hiring and those kinds of things. They're investing in education for current and future. , workforce as well. They, , gave us their strategic framework. It really hasn't changed all that much. , they're going to strengthen the core and they're going to expand.
, their reach either through investments and through service area growth. They have, , they talked about their lessons learned during the pandemic. It's reinforced that. Good health is good. Business partnerships equals acceleration. Equitable outcomes is an imperative. Consumer experience is a differentiator.
And scale and speed to action equals strength. And that is so true, especially during the pandemic. Those systems that were able to move quickly. And adapt quickly, , we're able to weather the storm and then they go into their financial performance, which is drives that home. Right. So strong and steady financial performance there.
Operating revenue is a a little over 10 billion. , there, , EBITDA up over 12%. The big point that Bert Zimmerli, the CFO made was that over 50% of their revenue is not going to come from fee for service this year. And that was a, that was noted in contrast, to the Ascension.
Presentation that 90% of their revenue comes from fee for service and they don't expect that to change for the next three years. Again, we'll come back to that. , at a later time. , key financials, 10.7% operating, even a margin. Cash to debt ratio. , 457% operating margin. 6.4%.
Debt to capitalization 17.5 again, very low. Day's cash on hand 460. This is a system that just has impeccable performance. Their average age of plant is nine. , years. , so , you have , a lot of things that are really strong plus , they're growing, they made the acquisition. Of SEL and they are going to be growing into some additional markets. So they gave us some of their principles for growth. Moving forward, provide high quality service. Obviously it's just foundational.
Expand value-based care to improve affordability, diversify revenues, and geographies maintain strong financial stability, expect rigor and discipline. Achieve greater efficiencies through scale. While learning new competencies, they also highlighted some of their investments. I did not get a chance to write all those down. , but their investment portfolio looks
pretty interesting. , it's just an interesting group of companies. It will be, , important to keep an eye on that. I'm going to close today out. Cause we're already at the 11 minute mark. With, I'm talking about. Ascension. , so essentially presentation. is the one that is in contrast
to the, , inner mountain presentation, very fee for service heavy. , they're spread all over the country.
Let me see if I can find it So they're in 19 states, their top two in most of the major markets that they serve about 19,000 beds, 142 hospital, 142 hospitals over 19 states. 40 senior living sites, seven health plans. , 1.15 million covered lives. Again, that's a lot of covered lives. They just, cover a significant.
, geographical area. , all right, so that's, that's who they are and that's how widespread they are. Their total assets are 48 billion, 23 billion in unrestricted cash and investments. 325 days cash on hand. , 7.5. Billion in total debt, but told that the capitalization is 22.5%, which is pretty low.
, 310% cash to total debt. And then, , their financial ratings are extremely good. So again, Two very different operating models. Essential is doing fine. , Intermountain is doing fine. Essentially operating margins are not that great. Again, mostly fee for service. And when you look at this, their
, Operating revenue about 27. Billion. And there, , EBITDA was about. 2 billion. So, again, not the worst in the world, but a significant portion of that. , came from the relief funds. , , that the government handed out. So Ascension has some work to do to change their model. If they believe that the model is going to be changed,
so they give us four key strategies that they're working on to move forward. Optimize clinical enterprise. Enhanced footprint post-acute and at home strategy. New economic model. I'm sorry. And it's five consumer centric, flexible care delivery. So, let's see if there's anything behind the buzzwords. , they are focusing on really fine tuning their core.
They are looking to expand in those services that have higher margins. They are looking to push more of the care to the home. And the post-acute space. They are looking at managed care for populations where essential has already assuming material risk. So these are the areas where they have enough scale and capacity.
And probably have a more complete care continuum. They, , Are also looking to continue their investments and their growth and investments.
That's one of the years where they have done extremely well. They've invested in companies that have gone out. And spun out and they deliver services to other healthcare organizations and they do that. , at a fairly good profit and they also have, , an investment portfolio that does pretty well. They're going to deploy an Ascension wide financial model. Presumably to become more nimble as they move forward. So those are the primary strategies that we're seeing. They did talk about their it data and quality infrastructure.
I was hoping to see more around that data, to be honest with you. I think they, they had taken steps there and then project Nightingale sorta got a black guy. , because maybe they moved a little bit too fast with Google. But I think they were heading in the right direction. One of the things that they don't have going for them is they do not have a common EHR across their entire platform. And when you're looking at a hundred plus hospitals, that's going to create a significant amount of inefficiencies and less. They can really get behind that and change.
, , the way that information gets processed, the way that information gets shared. , across that, system. , it's going to be very hard to create the operational efficiencies that you really want to create on an organization of this size, at least from an operating standpoint. , the other thing I think, as I look at this and I said this before,
, I could see them start to sell off some additional markets. That are not profitable, where they are not necessarily a great operator they could sell off those assets, , and strengthened somebody who's already in that community to build out a complete continuum of care.
Just something to consider, I was hoping. For a little bit more, I'm going to try to have Eduardo on the, uh, keynote show.
Because I think he has brought a lot of really good thinking in, from outside the industry. I like where he was going with project Nightingale. I like where he's going with consumer experience. And I would like to hear more about that
I think that's going to be the foundation for stronger financial performance and stronger clinical performance across the entire health system. All right. That's all for today. If you know someone that might benefit from our channel, please forward them a note. They can subscribe on our website this week, health.com or wherever you listen to podcasts, apple, Google, overcast, Spotify, Stitcher, you get the picture.
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