- Trinity Health said negative investment returns were the primary reason behind its net loss of $1.4 billion in the fiscal year ended June 30, compared to $3.9 billion in profit during the prior year.
- A rise in contract labor costs to "unprecedented levels" and reduction in federal relief funding contributed to an operating loss of $206.3 million with a negative 1% margin in 2022, compared to operating income of $657.6 million and a 3.3% margin the year before, Trinity said.
- Targeted efforts to reduce its contract labor costs helped mitigate operating losses in the fourth quarter, the Livonia, Michigan-based healthcare system said, with June costs down 60% from the peak reached in March.
Trinity CEO Michael Slubowski warned last month that hospitals are “sending up a distress flare" about their ability to provide care while facing severe healthcare worker shortages.
Trinity's 92-hospital system had 3,900 openings for registered nurses and a 14% vacancy rate for critical support staff, the CEO said on a call last month with the American Hospital Association. The labor shortages were causing delays in care at its hospitals.
In its earnings release, Trinity reported operating expenses for the fiscal year rose 4% to $20.1 billion from a year ago, driven by an 8.2% increase in labor costs.
Salaries and wages climbed 6.2% while contract labor expenses were up 123% for the year, compared to the prior period, even with the reduced expense in the fourth quarter, the healthcare system said. Decreases in insurance costs, purchased services, depreciation and amortization, and interest partially offset the higher labor costs.
Trinity posted full-year operating revenue of $19.9 billion, down $230 million from a year ago, due to the reduction in federal relief grant funding. Net patient service revenue rose 1.8%, primarily because of increased volume and payment rates. Excluding the federal relief funding, total operating revenue of $19.8 billion increased 1.3% for the fiscal year.
The hospital system said it is focused on optimizing its clinical operations, revenue growth opportunities, labor retention, recruitment and stabilization, new care delivery models, and continued cost reduction efforts to improve its financial performance in fiscal 2023.