CHI continues turnaround, Q2 bolstered by lower restructuring costs
- Catholic Health Initiatives reported it almost broke even for the second quarter of fiscal year 2018 with an operating income loss of $1.5 million, a substantial improvement from the $146 million loss in the same period of fiscal year 2017.
- The Englewood, Colorado-based health system of more than 100 hospitals posted operating EBIDA of $282 million for the three months ending Dec. 31, 2017, up from $126 million a year earlier. Net income for Q2 was about $215 million.
- CHI attributed the improved performance to reduced labor and supply chain costs, lower restructuring expenses and insurance payouts from Hurricane Harvey damage.
CHI continues to emerge from a rough patch of restructuring costs. CFO Dean Swindle said in a statement the system expects the upswing to continue. “We are definitely seeing the very positive results of a comprehensive performance-improvement plan take hold,” he said. “We have consistently posted improved financials over the last year-and-a-half — and the significant turnaround in this year’s second quarter is a testament to our strategic and operational focus. We feel we have strong momentum for the second half of this year and through fiscal 2019.”
In December, CHI signed a merger agreement with Dignity Health, after a year of talks. The combined system will be the country’s largest nonprofit based on operating revenue and will include 139 hospitals across 28 states. The deal remains subject to regulatory approval, but is expected to close in the second half of this calendar year.
CHI is no doubt hoping to put itself in a better position to weather troublesome financial trends for hospitals. Lower patient admissions and reimbursements are an impetus for agreement such as CHI-Dignity Health and the merger between Advocate Health Care and Aurora Health Care.
The transition of KentuckyOne facilities to the University of Louisville continues, as does acute care divestitures in the Louisville area. CHI said the Kentucky region continued its “strong improvement trend” and saw positive movement across all markets.
Patient volumes were mostly down, with the exception of physician visits, which increased by 3.6%.
- Catholic Health Initiatives Quarterly Report As of December 31, 2017 and for the three and six months ended December 31, 2017 and 2016
- Healthcare Dive CHI posts $585M operating loss in FY17
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