- After income from operations more than doubled in the fiscal year ended in June, Dallas-based Baylor Scott & White reported a 7% decline in income to $359 million in the first quarter of fiscal 2022 as the health system's labor and supply costs increased.
- The pullback in the quarter ended Sept. 30 comes after income reached $1.26 billion in fiscal year 2021, up from $559 million the year before, according to financial documents released Friday. The figures compare to 2019 income of $725 million.
- The 51-hospital system's operating revenue rose 11% to $3.16 billion in the first quarter of 2022, compared to the same quarter a year ago, and rose 11% to $11.7 billion for the full year ended June 30, compared to a year ago, led by higher patient care revenue.
Like its peers around the country, Baylor Scott & White is grappling with rising labor costs and other expenses as hospitals struggle to keep facilities staffed with healthcare professionals in the era of COVID-19. A study from Premier released last month found clinical labor costs are up 8% per patient day on average, driven by greater use of agency and temporary labor and more overtime hours than before the pandemic.
This has led to labor disputes in some areas.
California-based Kaiser Permanente over the weekend averted a strike by as many as 28,400 of its healthcare workers who were set to walk off the job on Monday over a pay dispute. Union members sought a 4% annual raise for the next three years and to avoid a proposed two-tiered wage structure. The tentative agreement reached includes across-the-board wage increases through 2025 and new bonus opportunities.
Nashville, Tennessee-based HCA, whose labor costs are also rising, used contract labor, overtime, bonuses and "whatever it took to staff to the patient load that we had" in the third quarter, CFO Bill Rutherford said last month. The for-profit hospital operator said it saw its largest surge of COVID-19 patients ever during the quarter.
Costs for labor and supplies at Baylor Scott & White, Texas' biggest nonprofit healthcare system, have accelerated as it enters its new fiscal year. The company said expenses for salaries, wages and employee benefits increased almost 6% in fiscal 2021 and climbed more than 12% in the first quarter of 2022 alone.
Supplies and other operating expenses, meanwhile, surged nearly 20% in the first quarter, compared to the year-ago quarter, after rising about 5% in fiscal year 2021 versus a year ago.
Inpatient admissions, patient days and average length of stay all increased in the quarter, and emergency room visits rose more than 35% year over year.
Looking to relieve some of the upward pressure on labor costs, Baylor Scott & White in January said it would eliminate or outsource 1,700 jobs in finance, information technology and other service operations, with those employees joining outside vendors or invited to retrain for other positions, according to the Dallas Morning News. It was the company's third cost-cutting move since the pandemic began, the report said.
The regional system has also entered into a partnership this spring with One Medical through which the expanding, Google-backed primary care network based in San Francisco will gain access to the Dallas-Fort Worth market.
In June, Baylor Scott & White announced the planned retirement of CEO Jim Hinton and appointment of President Pete McCanna to fill the position effective Jan. 1.