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Health systems maintained steady profit margins in 2017

A new five-year redesign and transformation program that began this year is expected to return about $200 million a year in growth and cost savings, Damschroder said.

Looking ahead, she said, Henry Ford is seeing continued strong outpatient volume and with good expense management “we are planning for an increase in operating income.”

On federal tax reform, which some experts said would benefit investor-owned hospitals more than nonprofits, Henry Ford broke about even. “When you look at our financial statement, we were very fortunate. We did total refunding before tax reform, so we dodged that impact,” she said.

The Republican tax reform plan, while reducing taxes and returning billions of dollars to corporations and individuals, eliminated tax-exempt bond refinancing, or advanced refunding, for nonprofit hospitals.

Damschroder said Henry Ford doesn’t plan to refinance bonds until at least 2019. “We will finish our new strategic plan in May and make plans then around the capital side,” she said.

The federal tax reform also places a 21 percent excise tax on covered nonprofit executives making more than $1 million per year. “We are going to see a slight impact on that, but we get a decline in the tax rate on taxable entities, so one netted out the other,” she said.

But Damschroder said Henry Ford executives are more concerned about a possible $25 billion cut in Medicare reimbursements to pay for the federal tax cut. Under federal budget rules, the Medicare program has an automatic payment cut when tax revenue drops. “We don’t know the date, but it is in the language, so it is a possibility anytime,” she said.

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