The Johns Hopkins Health System’s operating profit dropped 70 percent in the first quarter of 2019, in large part because of problems in the All Children’s Hospital heart surgery program, according to the system’s latest financial report.
The health system’s operating profit margin fell by a total of $31.7 million compared to the same period last year.
The disclosure said the decrease was “mainly driven by lower net patient service revenue at (All Children’s) as a result of the closing of the Heart Institute.”
All Children’s, typically among the system’s most profitable hospitals, finished the quarter with an $11.5 million loss from operations. It was nearly $11 million in the black at the same time last year.
The hospital said in a statement it remains committed to serving children in the Tampa Bay area. “We view any financial losses as temporary while we reinforce our commitment to the quality and safety agenda,” the statement said.
The report provides new insight into how vital the All Children’s heart surgery program had been to the bottom lines of both the hospital and health system.
Heart surgeries were halted last fall after Tampa Bay Times reporters began asking questions about safety concerns within the program. Weeks later, the Times reported that the mortality rate among pediatric heart surgery patients had tripled from 2015 to 2017 to become the highest in Florida.
The Times investigation found All Children’s had performed surgeries after employees reported unusual complications. It also found that the hospital’s leaders continued trying to grow the program.
Last May, then CEO Dr. Jonathan Ellen said safety and quality were the only factors driving decision-making.
“I don't actually know how much money the program makes,” he said.
Ellen was one of six hospital leaders who resigned shortly after the Times report was published.
All Children’s became part of the Johns Hopkins system in 2011. In addition to All Children’s, the network includes the flagship Johns Hopkins Hospital in Baltimore, as well as four other hospitals in Maryland and Washington D.C.
Records show the health system had been on solid financial footing. Its hospitals brought in $45.1 million in operating profit over the first three months of 2018, according to the financial disclosure.
That figure dropped to $13.4 million over the same period this year.
At All Children’s, inpatient hospital admissions for the first quarter of the year dropped 8 percent from last year. Inpatient surgeries fell 15 percent.
The drop in revenue from patient services was about $14 million.
When asked if the losses would result in staffing cuts or affect operations in other ways, hospital spokeswoman Kim Hoppe said All Children’s is “committed to staffing to the needs of (its) patients and families.”
“We will stay the course and continue to invest in our clinicians and the services they provide to our patients and their families,” she wrote in an email.
Employees had raised concerns about the possibility of staff reductions at a town hall meeting earlier this year.
The financial disclosure also noted that All Children’s was continuing to work through problems with infection control. And it pointed out that the hospital entered into an agreement with the federal government to “implement robust and systemic corrections.” As part of the agreement, All Children’s will hire an external consultant to oversee improvement for the next 12 months.
Separately, a former federal prosecutor was hired by the Johns Hopkins Medicine Board to investigate what went wrong in the heart surgery program.
The “lessons learned” will be presented to the Board in June, Hoppe said.