Profits plummet by 97pc at Bon Secours hospitals
Restructuring costs, including redundancy payments, contributed to profits at the country's largest privately-owned hospital group plummeting by 97pc to €155,000 last year.
New figures lodged by Cork-based Bon Secours Health Systems with the Companies Office show that the group's profits decreased sharply from €4.96m.
Revenues reduced by 1pc from €223.7m to €221.34m.
The group employs 2,500 personnel, along with 350 leading medical consultants, in privately-run hospitals in Cork, Dublin, Galway and Tralee and provides care to 200,000 patients annually.
Exceptional costs of €1m last year - made up of €780,000 in restructuring costs and €276,000 in legal and settlement costs - reduced the group's operating surplus last year from €1.86m to €810,000.
Net interest payments of €655,000 reduced the group's profits further to €155,000.
In a statement yesterday, the group stated that "2014 was a very challenging year for Bon Secours. The significant reduction in the operating surplus was a direct result of the group having to absorb price reductions from insurers together with volume reduction due directly to the attrition in the insurance market place."
The group added: "The group successfully implemented a number of initiatives to reduce its cost base and increase revenue in late 2014."
These measures includes the development of urgent care/rapid access services at all hospitals and increasing awareness and reputation of the group's hospital services through new marketing, business and service development initiatives.
A group spokeswoman said: "These initiatives have laid an important foundation for future growth with a strong recovery already evident in 2015 with patient volumes for the first half of 2015 increasing by 4pc on the same period in 2014."
The spokeswoman stated that having completed a major expansion at Tralee Hospital, the board is now proceedings with plans for the construction of a major €60m development at its Cork facility.
On the 2014 performance the directors' report state that the sector has endured six consecutive years of price reductions from health insurers which has materially eroded margins earned in the business.
The report adds that inflationary pressure is now building on the cost side, particularly in the area of payroll which in 2014 constituted 53pc of the total cost of operations at Bon Secours.
The directors state that as a consequence of the significant reduction in the health insured population in the last three years combined with substantial amount of downgrading of cover by insurer companies, in-patient volume and activity at Bon Secours facilities during 2014 was 5pc lower than in 2013.
The directors state that with a significant fixed cost element to the overall cost base of the group, this reduction in volume has had a serious impact on the results in 2014.
The group has a strong balance sheet with accumulated profits standing at €70m. The group's shareholder funds stood that €130m. The firm's cash during the year reduced from €34.7m to €30.8m.
Numbers employed rose from 2,713 to 2,719 with staff costs declining marginally at €119.67m.That included €106.26m on salaries; €10.9m on social welfare costs and €2.4m on other pension costs.
The profit takes account of non-cash cost deprecation costs totalling €9.9m.