Major South Jersey health systems’ operating margins fell last year, latest audits show

Rising costs for labor and other expenses squeezed South Jersey’s three largest not-for-profit health systems last year, but only Inspira Health Network reported losing money on operations, according the organizations’ latest audited financial reports.

Inspira, which owns four hospitals in Gloucester, Salem, and Cumberland Counties, lost $42 million on $1.09 billion in revenue. This marked a significant reversal from 2021, when Inspira reported $53 million in operating income on $1.05 billion in revenue.

Fitch Ratings said in a recent report that Inspira incurred $54.3 million in overtime and contract labor costs last year, significantly reducing the organization’s margin. The ratings agency said it expected Inspira’s financial results to improve in the next few years.

South Jersey’s largest health system by revenue, Virtua Health, had $179 million in operating income, down from just under $200 million in 2021. The five-hospital system reported an 8.5% increase in revenue to $2.56 billion.

Cooper University Health Care, which reached an agreement in April to acquire Cape Regional Health System, had a bigger revenue gain. Cooper’s revenue climbed 9.5% to $1.98 billion. It had $129.6 million in operating income, for a margin of 6.6%, slightly below Virtua’s 7% margin.

The two smallest hospitals by revenue in Southern New Jersey — Shore Medical Center in Somers Point and Cape Regional in Cape May Court House — had widely disparate results.

Cape Regional was the only one of the six operators in the region to report a decline in revenue. Its revenue was down 5.4%, to $167.4 million. Cape Regional, which is expected to become a solid source of referrals for more advanced care at Cooper, had a $10 million operating loss last year, compared to a $1.6 million profit in 2021.

Shore Medical, by contrast, reported an extraordinary operating margin of 16.6% on $291 million in revenue. Its revenue gain was also strong, up 9.6%. Shore Medical did not respond to a request for comment on its financial performance.

Financial results for Capital Health, which is based in Pennington, were not yet available.