Dive Brief:
- Catholic Health Initiatives, out of Englewood, Colorado, just announced a $134.7-million operating loss against $3.2 billion in revenue for the first quarter of their 2015 fiscal year, which helps explain why it will cut 1,500 jobs in January 2015.
- The loss is a mismatched bookend to the company's $182.4-million surplus for the same period a year ago, according to financial statements released by the company. CHI has suffered from a dramatic drop-off in patient utilization that was coupled with a 20% increase in charity care during the fiscal year, amounting to $910 million in uncompensated care.
- Fortunately for CHI, the lost jobs aren't quite as much of a catastrophe for the system as they sound. While 1,500 jobs will have a significant impact, it's only about 1.7% of the 105-hospital system's overall workforce, according to a Denver Post report.
Dive Insight:
Short of a specific disaster—such as the losses suffered by some hospitals after installing the costly, complex Epic Systems EMR—it's decidedly unusual for a hospital system to go from a substantial surplus to an equally substantial loss within one fiscal year. Though it may be fair, at least in part, to blame reduced utilization of services, the real question is why services dropped so sharply.
According to CHI's financial statement, it actually generated $3.37 billion in net patient services revenues for the three months ended September 30, 2014, while net patient services revenues were $3.09 billion for the same period in 2013. But the financials indicate that while net patient revenues were up for this quarter, expenses, especially supplies, rose enough to wipe out those patient revenue gains.
With a healthy patient mix and only a few struggling hospitals among a largely successful stable of properties, it seems likely that this is just a blip in CHI's history. But between restructuring costs which have weighed the chain down, and the hit to morale likely take place in the wake of the firings, the next few quarters probably won't be easy ones.