CHI posts $77.9M operating loss in FY18 first quarter
Clarification: A previous version of this story stated CHI had divested its Louisville-area facilities. That process is not complete yet. The board has approved the divestiture, but the marketing and sales processes will continue through the end of fiscal 2018.
- Catholic Health Initiatives reported a $77.9 million operating loss for the period ending Sept. 30, but saw positive trends in the fiscal year 2018 first quarter associated with cuts in supply and labor costs.
- Operating revenue of $3.7 billion was on par with the same period a year ago, and reflected the impact of Hurricane Harvey in Texas in August. The storm forced CHI to evacuate and temporarily close two hospitals in August, at a cost of $25.8 million.
- The results reflect the struggles many hospitals face as they attempt to restructure and reposition themselves in a more consolidated and value-based healthcare environment.
Despite the hit from Hurricane Harvey, CHI managed to narrow its operating loss to $77.9 million from $180.7 million last year.
Part of that was due to reductions in supplies and labor costs. During the quarter, supplies as a percentage of net patient-services revenues declined by nearly 1%, while labor costs fell by about 3%. Jobs have been on the chopping block at a number of hospitals and health systems as organizations try to rein in rising costs.
CHI has made strides to get back on sounder financial ground. During the past year, the Englewood, Colo.-based health system sold its KentuckyOne facilities and transitioned operations, management and control of University of Louisville Medical Center back to the university. It is also in the process of divesting nearly all of its Louisville-area acute care facilities.
“We did not expect an organizational turnaround to be quick or easy — but we have made substantial progress in recent months and expect that trend to accelerate throughout the fiscal year,” Dan Swindle, CHI’s president for enterprise business lines and CFO, said in a release. “We’ve taken all the necessary steps in our transformation to a higher-performing organization—and we certainly expect the numbers to reinforce that as we move through the 2018 fiscal year.”
CHI has been in talks with Dignity Health about a possible merger and is reportedly in the final stages of the due diligence process on that transaction. If completed, the deal would create one of the largest nonprofit health systems in the country based on revenue.
- Catholic Health Initiatives Catholic Health Initiatives Shows Substantial Gains in First Quarter of FY18, Doubling EBIDA as Performance-Improvement Plan Delivers Significant Cost Reductions
- Becker's Hospital CFO Report CHI sees operating loss narrow to $77.9M, says merger with Dignity still in the works