CHICAGO – Nov. 16, 2021 -- CommonSpirit Health released financial results today for its fiscal year 2022 first quarter. CommonSpirit recorded an operating gain despite lingering impacts of the pandemic and the Delta surge, demonstrating continued financial stability during what remains a challenging environment for health care providers.
CommonSpirit recorded operating income of $34 million, a 0.4% margin. EBITDA was $503 million, a 5.9% margin. Net patient and premium revenue rose 12.3% compared to the prior year’s quarter, reflecting a return in patient volume as well as revenue from Virginia Mason Health System (VMHS) and Yavapai Regional Medical Center (YRMC), which joined the system last winter. Expenses also rose, driven by increased labor and supply costs impacting providers across the country. Labor expenses per adjusted admission rose 7.5% compared to the prior year’s quarter, primarily due to higher contract labor costs and premium pay programs.
In a reflection of stronger sustained financial performance, S&P Global Ratings announced Friday that it has raised CommonSpirit’s long-term rating to A- from BBB+. S&P cited CommonSpirit’s progress in integrating the operations of its founding organizations, continued identification of cost efficiencies, strong management team, and strategic operating approach in announcing the rating upgrade.
On a same-store basis, adjusted admissions rose 3.8% compared to the prior year, outpatient visits rose 8.8%, and ED visits saw the most significant rebound, rising 20.8%. CommonSpirit care sites continued to provide care for a significant number of COVID-19 patients, reflecting a surge in cases caused by the Delta variant. The organization’s COVID-19 patient census rose steadily throughout the quarter and peaked at almost 2,900 patients in early September. Although that number has since declined, it remains above 1,000, and the system expects to continue caring for a significant number of COVID-19 patients for the foreseeable future.
“Given the circumstances this was a very solid quarter for the organization,” said CommonSpirit CFO Dan Morissette. “No doubt there is more room for improvement and growth. But when considering impacts from the Delta surge, increased labor and supply costs, and the lack of government aid compared to the prior year, we’re pleased to have achieved a measure of financial sustainability.”
A national health care worker labor shortage continues to be one of the most significant challenges for CommonSpirit. The organization is taking a number of steps to retain staff and fill open roles, including providing increased financial incentives for new employees and re-training existing staff to better meet demand for care in certain clinical areas. CommonSpirit has also worked to expand relationships with educational institutions to have a longer-term impact on the availability of qualified clinicians and other health care workers.
In an effort to create the safest possible workplace and care environment, CommonSpirit announced in August that all eligible employees must be vaccinated against COVID-19 or receive an approved medical or religious exemption, aligning with the recently announced federal requirement.
CommonSpirit CEO Lloyd H. Dean announced on Oct. 11 that he would retire from the organization next summer, saying that he believed the company has the financial and operational foundation that allows him to step aside. CommonSpirit’s Board of Stewardship Trustees is conducting a national search for its next CEO. The announcement followed the release of CommonSpirit’s first strategic roadmap, called CommonSpirit 2026, which outlines a series of 5-year priority initiatives to ensure the organization can thrive amid changing consumer, patient, employee and clinician expectations around health care.
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.