CHICAGO – May 15, 2023 - CommonSpirit Health released financial results for its fiscal year 2023 third quarter which ended March 31. The results reflected continued strong volume growth, offset by a decline in revenue per adjusted admission and continued rising costs and labor shortages.
CommonSpirit reported operating revenues of $8.57 billion and operating expenses of $9.08 billion for the quarter, compared to $8.52 billion of revenues and $8.98 billion of expenses for the same period last year, when normalized for net income from the California Provider Fee program. The health system recorded a normalized operating loss of $508 million and EBITDA of -$38 million, a -5.9% and -0.5% margin, respectively. The organization continued to see strong volume growth, with adjusted admissions on a same-store basis rising 9% compared to the prior year’s quarter. Same-store outpatient visits increased 4.7% and ED visits rose 5.1%.
However, results were impacted by a decrease in revenue per adjusted admission caused by a slight decline in patient acuity and reimbursement that has not kept pace with inflation. Other factors impacting performance included rising expenses, labor shortages, and impacts from a cybersecurity incident in late 2022.
“CommonSpirit is delivering high quality services all along the care continuum to communities across the country. These results show that patients and consumers are continuing to seek care through a broad range of access points,” said CommonSpirit Chief Financial Officer Dan Morissette. “Now we’re taking decisive steps to boost revenue and address our costs to ensure we’re operating in a sustainable way for years to come.”
CommonSpirit is focused on a number of specific initiatives to improve performance in the near and long term. The organization continues to focus on volume growth, in part by expanding its use of patient connection and transfer centers to support patient engagement and experience across the care continuum. CommonSpirit is prioritizing other growth initiatives including revenue cycle improvements, with an emphasis on improving net revenue by reducing clinical denials and underpayments and expediting payments from payers through settlements on aged accounts receivable.
The organization is also focused on expense reduction. It has worked to reduce labor costs, which has impacted a number of leadership, administrative and other roles at the division and national level that do not affect patient care. At the same time it continues to invest in expanding its nursing residency and virtual nursing programs, which are helping to retain staff and lower care delivery costs. And CommonSpirit continues to pursue operating efficiencies that leverage its scale, including centralizing additional functions and expanding its model for managing national service lines.
The organization also continues to invest in markets where there is an opportunity to grow and diversify its care network. On May 1, CommonSpirit completed the acquisition of care sites in Utah owned by Steward Health Care, which includes 5 hospitals and more than 40 clinics. The move represents a significant long-term growth opportunity and extends CommonSpirit’s reach into a new region with an established continuum of ambulatory, acute and post-acute services. CommonSpirit and Advent Health also recently announced their intention to end their Joint Operating Agreement for managing their Centura Health care sites in Colorado, Kansas and Utah. Following the transition, CommonSpirit will directly manage its 20 hospitals and associated clinics.
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 143 hospitals and approximately 2,300 care sites across 22 states. In FY 2022, CommonSpirit had revenues of $33.9 billion and provided $4.9 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.