(CHICAGO – Feb. 15, 2022) – CommonSpirit Health released financial results today for its fiscal year 2022 second quarter. CommonSpirit recorded an operating loss of $81 million, a -0.9% margin, while EBITDA was $442 million, a 5% margin. The results reflected the impact of higher labor and supply costs and increased length of stay, which were partially offset by a return in patient volumes, continued improvements in productivity and higher acuity.
Net patient and premium revenue rose 9.3% compared to the prior year’s quarter, indicating a continued rebound in patient volume. On a same-store basis, adjusted admissions rose 1.5% compared to the prior year, outpatient visits rose 5.1%, and ED visits rose 16.6%. Those gains were offset by increased expenses compared to the prior year’s quarter. Labor expenses per adjusted admission rose 12.3%, a result of significantly increased staffing costs impacting providers nationwide.
“This quarter demonstrated how important it is that we are proactive and strategic about managing the impacts of the COVID-19 pandemic,” said CommonSpirit Chief Financial Officer Dan Morissette. “While patients continued to return to our care sites, labor and supply costs also rose significantly. Our priority now must be meeting the increased demand for care and doing all we can to support our employees, while also focusing on efficiencies as we continue to see ebbs and flows from the pandemic.”
The national health care worker labor shortage continues to be one of the most significant challenges for CommonSpirit and the organization’s top priority was ensuring its care sites had enough available staff to meet the demand for care from its communities. A wide range of steps were taken to add staff and support employees while seeking to manage labor expenses, including accelerating hiring and onboarding processes, retraining and moving staff between care sites, leveraging traveler and contract employees, increasing incentive and retention programs for existing employees, and rapidly expanding wellness and support programs to address the fatigue many employees are experiencing. The need to add staff, coupled with higher than normal contract labor costs and a high number of staff who were out sick, as well as increased incentive and overtime pay, all contributed to higher labor expenses in the quarter.
Supply costs also rose 11.6%, driven by inflation and the need to purchase more supplies in response to higher acuity and the omicron surge. The steps CommonSpirit had taken earlier in the pandemic helped mitigate the increase in supply costs, including centralizing and coordinating supply purchasing across the organization and identifying additional U.S.-based suppliers.
CommonSpirit facilities continued to treat a significant number of COVID-19 patients through the quarter. The start of the quarter was marked by the end of the delta variant’s surge, while the end of the quarter saw a rapid increase in cases caused by the omicron variant’s surge. The COVID-19 census remained above 1,000 patients for most of the quarter, compared to a peak of nearly 2,900 patients in early September, before growing to more than 2,000 patients by Jan. 1. Although the omicron variant resulted in less severe disease than delta, it still led to a significant number of hospitalizations. Average length of stay rose in the quarter, partly as a result of decreased capacity at post-acute care sites caused by the labor shortage.
Addressing health care labor challenges in the longer term continues to be a strategic priority for CommonSpirit. The organization has worked to expand relationships with educational institutions to have an impact on the availability of qualified clinicians and other health care workers in the coming years.
CommonSpirit and Morehouse School of Medicine announced in November the development of three undergraduate and four graduate medical education sites that will address two of the most pressing challenges in health care – a shortage of diverse clinicians and the need for more equitable health care. The announcement launched the first phase of the More in Common Alliance, a 10-year, $100 million initiative to increase cultural competency and expand representation to improve both access and quality of care for patients. CommonSpirit is also expanding its longstanding relationship with Creighton University, recently announcing a significant investment in the school’s expanded campus in Arizona to provide up to 100 full-tuition scholarships to underrepresented students of color over the next 10 years. And it continues to leverage relationships with other academic partners such as Baylor College of Medicine in Houston.
CommonSpirit also continues to advance long term approaches to address nurse staffing challenges. Key initiatives include a new systemwide nursing residency program that will start in the spring; expanding the company’s internal nurse staffing agency; and growing the number of markets participating in its virtually integrated care model that leverage virtual nurses and other staff.
About CommonSpirit Health
CommonSpirit Health is a nonprofit, Catholic health system dedicated to advancing health for all people. It was created in February 2019 by Catholic Health Initiatives and Dignity Health. With its national office in Chicago and a team of over 150,000 employees and 25,000 physicians and advanced practice clinicians, CommonSpirit operates 140 hospitals and more than 1,500 care sites across 21 states. In FY 2021, CommonSpirit had revenues of $33.3 billion and provided $5.1 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.