Ascension reports loss of $2.7B in Q1


https://www.healthcaredive.com/news/ascension-reports-loss-of-27b-in-q1-COVID/578579/

Dive Brief:

  • Ascension reported a total loss of $2.7 billion in the first three months of 2020, compared to income of $1.2 billion during the same time last year, according to new ​financial statements from the nonprofit giant.
  • The Catholic system, one of the largest hospital operators in the country, saw operating revenue decrease 2.5% year over year in the period ending March 31 to $6.1 billion. That came as expenses like salaries and supplies ticked up by more than 3% to $6.4 billion.
  • Ascension also reported losses from investments of $2.48 billion, compared to return from investments of $1.1 billion from the same time last year. Nonprofit operators are reporting massive investment hits as the stock market slid in the beginning of the year following widespread business closures and shelter-in-place orders stifling the economy.

Dive Insight:

Nonprofit hospitals are posting huge losses for the outset of 2020 as analysts predict an even grimmer second quarter to come. However, though losses in the first three months of the year dragged St. Louis-based Ascension into the red, the provider behemoth is still in a relatively good position to weather the pandemic, with current assets of $38.3 billion and 231 days of cash on hand.

Though patient volume was up prior to the pandemic, revenue from providing medical care flagged in the three-month period, as inpatient and ambulatory care slowed as the coronavirus surfaced in the U.S. In mid-March, Ascension deferred all non-essential procedures as stay-at-home orders kept potential patients in the home, impacting the system’s volumes.

Total net patient service revenue was $5.7 billion, down 3% year over year. Net patient service revenues had the sharpest drop off in March, decreasing more than 15% in that month alone.

“COVID-19 has been encountered across all Ascension markets, to varying degrees, and has had an adverse effect,” Ascension management wrote in comments on the results.​

The system, which operates more than 2,600 sites of care, including 150 hospitals across 20 states and the District of Columbia, has received federal help to make up for lower-than-expected revenue. Ascension said in the filing it has received Coronavirus Aid, Relief and Economic Security Act​ funding before March 31. Though a spokesperson declined to tell Healthcare Dive a specific figure, Ascension has received at least $211 million from HHS, according to a New York Times review of the grants finding large hospitals with deep pockets are receiving the lion’s share of congressional funds.

Smaller hospitals that serve more vulnerable populations were deeply critical of HHS’ initial method to distribute the CARES funds, which put high margin hospitals at an advantage. The department did not take into account hospitals’ existing financial resources in distributing the pot.

Nine-year-old Ascension also received just under $2 billion in accelerated loans from the Medicare program.

Normal increases in operations compounded the negative effect of the pandemic, Ascension said. The system was funneling money into expanding service lines and sites of care and standardizing revenue cycle services prior to the COVID-19 crisis, which sharply increased expenses.

Supplies expenses particularly jumped in March by almost 7%, as the system hustled to procure needed equipment at unexpected rates to prepare for an anticipated surge in COVID-19 patients.

 

 

 

 

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