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Beaumont Health's net operating income in the first three months of the year slid 31% following investments in employee salaries and fewer inpatient admissions.

The Southfield-based nonprofit health system reported an 8% increase in net income of $129.1 million for the first quarter of 2019. And while operating profit dropped to $37.6 million, the company had a 2% increase in operating revenue to $1.15 billion.

Operating margin fell to 3.3% from 4.8%. Cash and investments totaled $2.1 billion, up 11% from last year.

Beaumont Chief Financial Officer John Kerndl said in a statement the organization anticipated the changes in its operating performance and accounted for them in its plans for the year following salary and benefits adjustments in 2018.

There also were more inpatient admission conversions to observation cases, as the health system emphasizes preventative care and bringing its services closer to its patients, Kerndl said. Beaumont is building outpatient campuses in Lenox Township and Livonia, investing in urgent care centers, opening a Dearborn psychiatric facility and expanding its Farmington Hills hospital. It also has applied to build a hospital in Oxford.

"Health care is rapidly evolving and we are focused on positioning ourselves for strong future growth," Kerndl said. "For example, patients are increasingly seeking care in outpatient settings, which is why we invested in more outpatient centers and urgent cares. In addition, we have invested in our people through planned salary and benefit increases."

bnoble@detroitnews.com

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