Nov. 13, 2020—CHICAGO—CommonSpirit Health (“CommonSpirit”) today released financial results for the quarter ended Sept. 30, 2020. CommonSpirit saw a significant increase in revenue and operating income compared to the previous year’s quarter, demonstrating strong financial progress and success scaling operational efficiencies despite headwinds cause by the COVID-19 pandemic.
Revenues for the Chicago-based health system were $7.72 billion, up from $7.41 billion for the same period in the prior year, when the prior year is normalized to include three months of California provider fee revenues. CommonSpirit recorded an operating gain of $167 million, compared to a loss of $106 million for the previous year’s quarter with normalized provider fee net income. EBITDA was $642 million, an 8.3% margin.
The COVID-19 pandemic continues to impact CommonSpirit’s financial performance, and federal aid remains critically important for the organization. Excluding CARES Act funding recognized as revenue in the first quarter, CommonSpirit’s operating loss would have been $25 million and its EBITDA margin 6.0%, both still a marked improvement over the prior year’s quarter. Volumes remained below pre- pandemic levels – inpatient admissions on a same store basis were 6.4% below last year’s quarter – but continued to rebound, with September admissions just 5.2% below last September’s total.
The stronger results were attributed largely to a rebound in patient volumes compared to earlier in the pandemic, higher patient acuity, strong expense management, and a stable payer mix.
“Despite the significant headwinds created by the pandemic, we have taken huge strides with our financial and operational performance,” said CommonSpirit CFO Dan Morissette. “While we will undoubtedly continue to face challenges in the months ahead, we have taken meaningful steps to improve our performance, manage our expenses, and meet the health needs of our patients and communities across the country.”
CommonSpirit’s response to surges in COVID-19 cases continues to be bolstered by its strong operating model and ability to implement clinical and operational actions across its network of facilities. Today CommonSpirit’s COVID-19 case count is up more than 50% since early October, though still significantly below its mid-August peak.
CommonSpirit has built up a significant supply of PPE through new domestic and international sources, and in September opened its new high capacity testing lab in Arizona capable of processing more than 10,000 tests each day. The organization has also launched new programs to reduce caregiver burnout, rapidly retrain staff, and allow ICU nurses to care for patients virtually. The organization does not expect that most of its facilities will need to pause elective and other procedures in the near term, although some facilities may need to temporarily halt certain services depending on the circumstances in each community.
CommonSpirit’s improved financial results build on financial progress and strategic planning in recent months. The pandemic has accelerated the standardizing of key clinical and operational processes, with the organization implementing a new enterprise performance dashboard to track the company’s operational performance and financial health. CommonSpirit also plans to announce a new strategic plan in the first half of the calendar year. And CommonSpirit received strong demand for $2.3 billion in bonds that were priced in late October, with more than $8.4 billion in orders, achieving a favorable cost of capital, generating net present value and cash flow savings, and providing long term capital stability for the organization.
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 approximately 150,000 employees and 25,000 physicians and advanced practice clinicians, CommonSpirit operates 139 hospitals and more than 1000 care sites across 21 states. In FY 2020, CommonSpirit had combined revenues of nearly $29.6 billion and provided $4.6 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.