- Nonprofit hospital giant CommonSpirit Health reported a better operating performance in its 2021 fiscal year than in 2020, but said in financial results released Friday it expects COVID-19 to continue to pressure its operations in the coming year.
- The Chicago-based Catholic system reported operating income of $998 million for its fiscal year ended June 30, compared to an operating loss of $550 million the year prior.
- However, excluding federal relief funds from the Coronavirus Aid, Relief, and Economic Security Act passed last March and a sale of part of its stake in an unnamed joint venture, the system would be posting an operating loss of $215 million.
It’s CommonSpirit’s second full fiscal year as a a combined organization after the merger of Dignity Health and CHI was completed in February 2019. The marriage resulted in the largest nonprofit system in the U.S., with 140 hospitals and roughly 1,500 sites across 21 states.
However, that scale didn’t protect CommonSpirit from being slammed by the pandemic’s financial effects in 2020, as lower admissions, badly performing investments and higher charity and uncompensated care expenses severely depressed its bottom line.
Though many COVID-19 headwinds continued into its 2021 fiscal year, returning patients, stronger investment performance and cost reduction initiatives helped CommonSpirit to net income of $5.5 billion for the year, compared to its steep loss of $524 million in 2020.
CommonSpirit’s revenues rose more than 12% compared to the 2020 fiscal year, mostly due to recovering patient volume and the addition of new care sites, including Virginia Mason Health System in the Pacific Northwest and Yavapai Regional Medical Center in Arizona, and expanded ambulatory surgical center relationships in several states.
Expenses were also up by 7% year over year mostly due to “significant” pandemic-related expenses, CommonSpirit said in its release on the results.
However, the higher costs were offset by cost management, including more than $400 million in cost reductions in the fiscal year. And, due to stronger financial markets, the system’s balance sheet was also boosted by $3.4 billion in investment income.
But despite the turnaround, CommonSpirit management warned COVID-19 is still likely to dog the system’s performance as it enters its third fiscal year as a combined entity.
The recent surge in patients due to the rise of the highly infectious delta variant caused the system’s COVID-19 inpatient census to jump to almost 2,900 in early September. That’s up from a low of 340 in June, though still significantly lower than CommonSpirit’s previous peak of more than 4,100 COVID-19 inpatients recorded in early January.
Amid the rising cases, the system said it’s emphasizing employee retention as staffing shortages, especially acute among nurses, continue to stress providers nationwide.
CommonSpirit noted it doesn’t expect personal protective equipment or ventilator availability to be a problem, despite increasingly taxed capacity and rising need in the U.S.
Like other providers, the nonprofit operator reported it saw patients begin to return for preventative and delayed care throughout the fiscal year, though that return decelerated in tandem with escalating COVID-19 cases.
Same-facility adjusted admissions dropped 2.7% year over year, while outpatient visits rose 5.1% overall.
Additionally, demand for virtual visits has remained strong even as in-office volumes have recovered. Telehealth use has stabilized at roughly 13% of overall volumes, CommonSpirit said, though that’s down from a high of more than 37% notched in April of last year.
Net patient and premium revenues jumped more than 10% year over year due to higher patient acuity, the YRMC and VMHS affliliations and stable payer mix, CommonSpirit said. Those tailwinds were partly offset by volume shortfalls due to the pandemic.
CommonSpirit, which said it was still on track to achieve the cost-savings goals outlined in CHI and Dignity’s 2019 merger plans, expects to release a new five-year strategic roadmap in the fall.