- With help from federal coronavirus relief, nonprofit CommonSpirit Health reported fairly healthy operational earnings of $1.4 billion for the 2020 fiscal year — its first as a combined organization, following the merger of systems Dignity Health and Catholic Health Initiatives last year.
- However, lowering admissions, badly performing investments and higher charity and uncompensated care expanses dinged the Chicago-based system's bottom line. CommonSpirit posted a total loss of $524 million for the year, compared to a $9 billion surplus for the two systems for the 2019 fiscal year.
- Adjusted revenues for the fiscal year were flat overall: $28.8 billion in 2020 versus $28.9 billion the prior year. But acute care admissions were down 6% year-over-year, while emergency room visits were down 8.3%. Although many patients have been rescheduling elective procedures in recent months, the organization did not provide any financial projections for fiscal 2021.
Fiscal 2020 represents the first full year that CommonSpirit Health operated as a combined organization after the merger of Dignity Health and CHI was completed in February 2019. Although the COVID-19 pandemic began in earnest nearly 10 months into fiscal 2020, it was still enough to knock the 137-hospital system — the largest not-for-profit operator in the U.S. — for a financial loop.
Despite relatively flat revenues, CommonSpirit got hit hard with a drop in patient admissions and rising charity and uncompensated care expenses.
Charity care was up almost 40%, totaling almost $2.1 billion for the fiscal year, compared to $1.5 billion in 2019.
Its investment portfolio also took a major hit, with investment income dropping by $337 million, and its total net assets declined by more than $2 billion to $13.6 billion from $15.8 billion in fiscal 2019.
Those factors helped move CommonSpirit into the red.
The Coronavirus Aid, Relief, and Economic Security Act did blunt some of the pain. Through June 30, CommonSpirit recieved $1.1 billion in CARES grants and has recorded $826 million as operating revenue so far, boosting operating earnings. About $227 million was deferred. The nonprofit also received $2.6 billion in advanced Medicare loans.
The system also said it had identified some $2 billion in merger-related benefits and eventually projects it will have regular annual operating margins of 8%, along with an improvement to its balance sheet. It reported having 202 days cash on hand.