Tag Archives: Advocate Aurora Health

Advocate Aurora raising minimum wage to $15/hour

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https://www.healthcaredive.com/news/advocate-aurora-raising-minimum-wage-to-15hour/543378/

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Dive Brief:

  • Advocate Aurora Health, a 27-hospital non-profit health system covering Illinois and Wisconsin, announced it will increase its minimum wage to $15 an hour by early 2021. The system plans to make the increase in steps, reaching $13 an hour in the middle of next year and $14 in early 2020.
  • In a message to staff, Kevin Brady, chief human resources office at Advocate Aurora, said the pay raise “aligns with our longstanding commitment to be market competitive and remain a place that attracts and retains top talent.”
  • It’s the latest in a growing list of health systems that are raising minimum wages. Allegheny Health Network and UPMC also set targets of $15 an hour this year.

Dive Insight:

Health systems are making these moves as they struggle to find employees in the competitive job market. Labor costs remain a major issue for hospitals and have led to nursing strikes over the past two years.

A recent Navigant analysis predicted hospitals and health systems will continue to see higher labor costs in the coming years as administrators raise wages to tackle shortages. Total employment compensation for the industry increased 2% in 2017 and 2.3% the previous year, according to the Bureau of Labor Statistics employment cost index.

Many states are also moving forward with minimum wage increases, including some that have increased pay to $15 an hour.

Brady said the health system’s goal is to be a “destination employer where our team members feel valued, have opportunities for growth and connect with our values and purpose-driven culture.” The decision will improve the workplace and, in turn, make patients “feel this is the best place to entrust their health and wellness,” he added.

Brady said the health system is investing in higher pay while still facing shrinking reimbursements and rising pharmaceutical costs. “Continuing to ensure that our team members have access to rewarding jobs with comprehensive benefits, competitive wages and an engaging work environment will not only strengthen our workplace, it will strengthen our marketplace and most importantly, enhance the quality of life in our communities from Green Bay to Bloomington Normal and everywhere in between,” he wrote to staff.

The Downers Grove, Illinois-based health system was created earlier this year with the merger of Advocate Health Care and Aurora Health Care. The system experienced a 20% drop in operating income in the first six months. The decrease was related to added costs connected to the merger and a new EHR.

Newly merged Advocate-Aurora sees 20% drop in operating income

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https://www.healthcaredive.com/news/newly-merged-advocate-aurora-sees-20-drop-in-operating-income/532082/

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Dive Brief:

  • After finalizing its merger in April, Downers Grove, Illinois-based Advocate Aurora Health released a financial report on the combined company’s year-over-year performance showing a 20% drop in operating income to $220 million for the first six months of the year. The decline is partly due to $34 million in costs related to both the merger and implementation of a new EHR.
  • Total revenue increased 3% to nearly $6 billion for the first six months of the year, while revenue increased 3.5% to about $3 billion for the quarter. Net patient service revenue grew across most service lines, excluding inpatient volumes during the quarter, according to the financial statement.
  • While revenue climbed, so did expenses. The 27-hospital system increased its spending on salaries and wages, supplies and purchased services, and contracted medical services. Total expenses grew 4% to nearly $2.87 billion during the three months ended June 30, and increased 3.5% to $5.68 billion during the first six months of the year.

Dive Insight:

In line with industry trends, inpatient volumes for what is now the 10th-largest nonprofit health system in U.S. either slightly declined or remained flat during the reporting periods. 

About 85,000 patients were discharged from Advocate Aurora during the first six months of the year while more than 3 million patients during that time were seen either during a traditional doctor’s visit or through another outpatient setting. The system’s home care unit saw the largest increases during both reporting periods. 

Meanwhile, the company is not alone in its struggles to rein in EHR rollout costs. The University of Texas MD Anderson Cancer Center in Houston and Partners HealthCare in Boston have all experienced those costs weighing down financial performance, according to a previous report from Becker’s.

The financial report of the combined companies marks a milestone in Advocate’s quest for a partner to increase its scale. The system set its sights on Aurora after it had long tried to acquire NorthShore University Health System, a deal Advocate later dropped after pushback from antitrust regulators worried about price increases.

Analysts don’t expect the frenzied pace of M&A in the healthcare sector to slow down any time soon. The Advocate-Aurora deal was the largest regional transaction, Kaufman Hall reported, amid a year that turned out blockbuster deals threatening to shake up the status quo. 

As patients seek care in lower-acuity settings and as payers and providers team up to transform access to the industry, hospitals have eyed mergers to increase scale and offerings to attract more patients.

The consolidated financial statement details the results of the quarter ended June 30 and the first six months of the year.