CommonSpirit Health continues to be hit hard by the COVID-19 pandemic, with its acute care and emergency room admissions down significantly during its first fiscal quarter ending Sept. 30. And while its financial performance has rebounded since the spring, same location adjusted admissions were down more than 10% during the quarter compared to the same period in 2019.
Meanwhile, the nation’s largest Catholic system is dealing with a significant increase in supply costs to treat patients who have been infected by COVID-19. Nevertheless, it was able to eke out a 7.7% increase in operating revenues compared to the same period in 2019.
CommonSpirit has also been buoyed by a $527 million jump in investment returns compared to the year-ago quarter. Partly as a result, it reported an $800 million surplus for the quarter, compared to a $285 million deficit during the same period in 2019. For fiscal 2020, it reported a loss of $550 million.
Like many other health systems, CommonSpirit Health — formed last year by the merger of Dignity Health and Catholic Health Initiatives — continues to see operations challenged by the COVID-19 pandemic.
Acute care admissions dropped 7.4% for the quarter compared to the comparable quarter of 2019. Emergency department visits — which tend to feed into inpatient admissions — dropped by 19%. However, acute inpatient days were mostly flat.
And while CommonSpirit’s hospital operations have been hit hard by COVID-19, its finances have rebounded significantly from prior quarters. Overall, the system reported a net surplus of $800 million, although much of that could be attributed to CommonSpirit’s investment returns during the quarter.
CommonSpirit took in $1.3 billion to date in government funding from the Coronavirus, Aid, Relief and Economic Security Act, including $192 million in revenue recognized from that pot during the quarter.
But it is a stark contrast to the red ink disclosed in its recent financial reports — pro forma losses of more than $1.5 billion combined in fiscal 2019 and 2020.
More dark days likely remain ahead, particularly as COVID-19's latest wave hits the U.S. The system acknowledged that its payer mix has experienced some modest deterioration due to patients losing their jobs and the accompanying healthcare coverage. As a result, charity care rose significantly, up 38% based on the cost of care and up 36% based on regular hospital charges compared to the same period last year.
But CommonSpirit management cast an optimistic tone about realizing the goals behind last year’s merger. It noted in its earnings disclosure that despite the ongoing pandemic, management expects to see between $350 million and $400 million in synergies, including "the acceleration of areas such as corporate labor reductions, consolidation of corporate and other real estate assets, as well as ongoing consolidation and insourcing in areas such as human resources, information technology, and revenue cycle."