- Advocate Health, formed through the merger of nonprofits Advocate Aurora and Atrium last year, reported first quarter operations that barely made it into the black, as revenue of $7.54 billion squeaked past expenses of $7.53 billion.
- In its inaugural first-quarter financial report released Tuesday, the nonprofit giant reported operating income of $10 million, representing an operating margin of 0.1%.
- However, investment income of $610 million helped spur Advocate to a net gain of $579 million in the quarter.
Advocate Aurora completed its merger with North Carolina-based Atrium Health in December to create Advocate Health, the fifth-largest nonprofit in the U.S. by revenue. Advocate operates 67 hospitals and more than 1,000 sites of care across Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama, and has annual revenue of $27 billion.
The system is comprised of three major divisions: Advocate Aurora, Atrium Health’s Charlotte-Mecklenburg Hospital Authority and Atrium Health Wake Forest Baptist. All three divisions reported year-over-year growth in revenue that outpaced expense growth, though only by a few percentage points.
In the first quarter of 2022, all three divisions reported a multimillion-dollar net loss, amid COVID-19 utilization pressures and losses from investments. A year later, all three divisions reported net income, thanks to higher revenue and stronger financial markets.
Higher utilization across all three divisions drove the revenue rebound, though patient days dipped slightly. Advocate reported roughly 170,000 total patients, 30,200 inpatient surgeries, 77,800 outpatient surgeries and 532,200 emergency department visits in the quarter.
Like its hospital operator peers, labor costs continued to pressure Advocate, as salaries, wages and benefits made up more than half of its overall expenses, at $4.4 billion.
Nonprofit earnings from the first quarter suggest the systems are beginning to recover from 2022, which some research says was the worst financial year for hospitals since the beginning of the COVID pandemic. Volumes continue to grow for hospitals and investment gains are increasing as the markets rebound, but rising costs remain an issue amid inflation and workforce pressures.