- Advocate Aurora Health reported a slight year-over-year profit increase in the second quarter to $408 million, according to financial results released Tuesday. Like other health systems, the nonprofit saw a rebound after shutdowns induced by COVID-19 forced major losses in the first quarter. Still, it suffered a harsh year-over-year operating margin plummet from 5.7% to -6.8%.
- Total revenue was down to $2.9 billion for the system, compared to $3.2 billion during the same time last year, as patient service revenue decreased more than 23% from the prior-year quarter. The Illinois-based, 26-hospital system posted an operating loss of $196.7 million, but investment income boosted it back into the black.
- Patient volumes in the second quarter were down nearly across the board, as the system did not reduce restrictions on elective procedures until mid-May. Outpatient visits dropped nearly 11%, but physician visits actually ticked up almost 3% in the quarter.
Like many other major nonprofit health systems, Advocate Aurora is buoyed by federal relief funds and a stable position going into the COVID-19 crisis. As of the end of the second quarter, the system had lines of credit amounting to $1.38 million and 279 days cash on hand.
Still, the system noted in its filing the copious unknowns associated with the novel coronavirus, which continues to ravage the United States. In particular, the filing noted potential changes in payer mix along with increases in the number of uninsured patients, the extent and timing of state and federal grants and the effect of the economic downturn on demand for elective procedures.
As of June 30, Advocate Aurora had received $364,991 in grants from the Coronavirus Aid, Relief, and Economic Security Act, which do not have to be paid back, as well as $730,000 in advanced Medicare payments, which are loans and do have to be returned.
Hospitals have lobbied heavily for the loans to be forgiven and for more federal relief aid to be allocated, but so far there is little agreement in Congress on additional legislation.
Advocate Aurora noted it expects an increase of about $40,000 in uncollectible accounts as unemployment increases from economic fallout following the COVID-19 pandemic.
The organization is preparing for a merger with Michigan's largest health system, Beaumont Health. The two signed a nonbinding letter of intent in June after talks that began at the end of last year were put on hold during the worst of the coronavirus crisis.
The plans are being held up, however, amid opposition from Beaumont physicians. The Beaumont board has not set a date for a final vote on the proposed merger, with the system saying last week it is "focused on meeting with our physicians, employees and community leaders to listen to them and answer their questions."
Advocate Aurora said then it still has confidence in the deal, and discussed how it could be financed in Tuesday's filing.
"As part of the transaction, the System nor Beaumont Health would agree, to assume any liability for or otherwise guarantee the other party's debt. However, the parties would evaluate whether the refinancing of all or a portion of the existing debt of either organization could be beneficial to a combined organization," the system wrote.