Michigan Medicine, the new name for the combined University of Michigan Health System and UM Medical School, posted a 5.6 percent operating margin that exceeded results over the last several years.

The Ann Arbor-based academic health group, which includes three hospitals, 125 clinics and a large faculty practice plan, earned $210 million in operating profits on revenue of $3.7 billion. Michigan's medical school generates total annual research funding of more than $470 million.

At a UM board of regents meeting Thursday, UMHS President David Spahlinger, M.D., also told regents Michigan Medicine is projecting a 5.4 percent margin on $3.8 billion revenue for fiscal 2018 that begins July 1. He said the rosy picture is due to improving quality and safety and reducing costs.

"These targets are aggressive but needed to fund our aspirations for the next five years and beyond," Spahlinger said in a statement. "We are challenging ourselves to reach those goals and give us the ability to invest in our future."

UMHS posted an operating margin of 4.6 percent in 2015 after posting deficits in 2012 and 2013.

Spahlinger, who also is executive vice dean for clinical affairs of the UM Medical School, added that the health system experienced somewhat higher patient volume than usual. No actual data was available at press time.

Projects completed in the past year include five operating rooms and five inpatient rooms to University Hospital, six patient rooms in the C.S. Mott Children's Hospital newborn intensive care unit and moving the psychiatry department into University Hospital South.

New projects underway include a new health center in west Ann Arbor set to open in fall 2017 and the Brighton Center for Specialty Care set to open in 2018.

UMHS also has been busy the past year adding affiliate hospitals. Last December, UM finalized a deal to acquire Metro Health Corp. in Wyoming. UM also owns a minority interest in MidMichigan Health in Midland.

Its UM Health subsidiary, which manages subsidiary companies, posted an operating margin of 0.2 percent on revenue of $377 million. Projected revenue for 2018 is $413 million for a slight loss of -0.3 percent margin. UM plans to make at least $40 million in capital investments at Metro Health.

From 2011 to 2015, Metro Health lost a total of $189.9 million on operations, according to American Hospital Directory Inc., a Louisville-based data company, based on Medicare cost report data. However, Spahlinger told Crain's that Metro Health earned a 2 percent margin in 2016.

In other action, the regents:

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Michigan Medicine health system posts better bottom line - Crain's Detroit Business