Dive Brief:
- CommonSpirit posted an operating loss of $658 million in the quarter ended March 31, an increase from its operating loss of $591 million in the prior year period, even as the system recorded lower contract labor costs.
- Volumes continued to grow, but rising costs remained an issue for the system, including workforce expenses overall, the nonprofit giant said Monday. CommonSpirit stressed a number of initiatives to improve operating efficiency, and announced it had cut a number of leadership, administrative and other non-patient-facing roles at division and national levels.
- Better investment returns due to a rebound in the financial markets helped mitigate CommonSpirit’s net loss, which was $231 million in the quarter. That’s compared to a net loss of $608 million in the prior year period.
Dive Insight:
The 143-hospital system recorded revenue of $8.3 billion in the quarter, the third of its 2023 fiscal year. Revenue growth was flat year over year, despite favorable volume trends. CommonSpirit’s adjusted same-store admissions rose 9% year-over-year, while outpatient visits were up almost 5%, and emergency room visits increased by more than 5%.
CommonSpirit experienced a drop in revenue per adjusted admission, as it treated less sick patients amid reduced high-acuity COVID-19 volumes, and reimbursement that hasn’t kept pace with inflation, the system said.
CommonSpirit also continues to bear the costs of an October ransomware attack that exposed patient data from more than 100 current and former CommonSpirit facilities in 13 states. Losses from the breach have climbed to $160 million, the system said.
CommonSpirit’s salaries and benefit costs dipped more than 2% year over year in the quarter, partially due to lower contract labor as the labor supply shortage improves. Supply costs and purchased services expenses increased roughly 3% and 7%, respectively, amid higher inflation.
The Chicago-based nonprofit is working to boost performance, including expanding its use of patient connection and transfer centers to boost volume, and improving revenue cycle by reducing clinical denials and expediting payments from health insurers.
“We’re taking decisive steps to boost revenue and address our costs to ensure we’re operating in a sustainable way for years to come,” CFO Dan Morissette said in a statement on the financials.
The system hasn’t pared back investments despite the losses. In early May, CommonSpirit completed its acquisition of five hospitals from Steward Health Care for a total consideration of $705 million, entering Utah for the first time and swelling its footprint to 22 states.
