CHICAGO – Sept. 23, 2022 – CommonSpirit Health released financial results today for its 2022 fiscal year, which ended June 30. CommonSpirit recorded an operating loss of $1.04 billion, a (3%) margin, while EBITDA was $883 million, a 2.6% margin, when normalizing the results for income yet to be recognized for the California Provider Fee program awaiting CMS approval.
CommonSpirit saw strong performance through the first half of the fiscal year, while experiencing challenges in the final two quarters that are impacting many health systems - in particular those that serve a majority of Medicare and Medicaid beneficiaries. These include increased length of stay for patients due to a lack of post-acute care resources; a workforce shortage and higher labor costs such as contract labor expenses and overtime pay; the impact of inflation on supplies and services; volumes that have not fully returned to pre-pandemic levels; and an end to federal COVID-19 provider relief funds that had provided key support.
Expenses rose by nearly 10% compared to the prior year to $35.46 billion, while revenues rose by just 3.5% to $34.42 billion, as payer and government reimbursement did not keep pace with increased costs of providing care to patients.
“This continues to be a very challenging time for health systems, especially nonprofit health systems like CommonSpirit where a majority of patients are Medicare and Medicaid beneficiaries,” said CommonSpirit Chief Financial Officer Dan Morissette. “As an integrated organization with a broad footprint, we’ve been able to take many steps to reduce costs and grow revenue. But it’s clear we need to do more to improve performance. We will remain focused on growth in the new health care landscape, finding additional cost savings, and lowering contract labor costs while reducing turnover and improving retention by doing even more to support our teams.”
This week, Fitch upgraded its rating on CommonSpirit's debt to A-, with a "stable" outlook based on CommonSpirit's substantial size, diversity and national scale, progress on synergies and integration activities, and a strong balance sheet. The rating agency said the rating reflects an expectation that CommonSpirit continues to realize performance improvements over a one to three year time frame.
Volumes saw significant improvement compared to the prior year, though they continue to be impacted by the pandemic. On a same store basis, adjusted admissions rose 1.9% compared to the prior year, outpatient visits rose 3.8%, and ED visits rose 14.1%. The Omicron surge in early 2022 had a significant impact on volumes, affecting patient visits to acute and outpatient care sites as well as staff availability.
CommonSpirit has taken a number of steps to grow and support its workforce in the near and long term. The organization has established internal programs focused on staff retraining, wellness, and resilience, and is aggressively working to identify new staff in key specialty areas. CommonSpirit has also worked to accelerate hiring and onboarding processes. The organization has developed new graduate medical education (“GME”) relationships and residency programs, with the goal of being a leading GME partner. CommonSpirit has created or expanded partnerships with academic institutions including the Morehouse School of Medicine, Creighton University, and Charles Drew University, and has launched a five-year nursing plan that includes creating a broad internal nursing residency program.
On Aug. 1, Wright Lassiter, III began in his role as CEO. Lassiter joined CommonSpirit from Henry Ford Health and succeeded Lloyd H. Dean, who had previously announced his retirement. Lassiter has expressed a commitment to improving CommonSpirit’s performance and continuing to transform the organization to meet changing care delivery expectations and opportunities. He serves as the current Board Chair of the American Hospital Association.
CommonSpirit continues to pursue growth opportunities in key markets, prioritizing service areas where it has the ability to create a continuum of ambulatory, acute, and post-acute services. In May, CommonSpirit affiliate Centura completed the acquisition of two LifePoint Health hospitals in Colorado and Western Kansas. In April, CommonSpirit and Trinity Health announced that Trinity Health would assume sole ownership of MercyOne, a health system in Iowa that had been jointly operated by Trinity Health and CommonSpirit (previously Catholic Health Initiatives) since 1998. The transaction closed on Sept. 1.
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 142 hospitals and nearly 2,200 care sites across 21 states. In FY 2021, CommonSpirit had revenues of $34.4 billion and provided $4.9 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.