- The COVID-19 pandemic continues to drag on Ascension's operational performance, but government relief funds and hefty investment returns yanked the nation's largest nonprofit system back into the black in its latest fiscal quarter.
- For the period ended March 31, the St. Louis-based Catholic giant reported operating revenue of $6.6 billion, up 7% year over year. However, expenses also ticked up on a year-over-year basis to $6.6 billion, driving the system to an operating loss of $16.7 million. That's still an improvement over Ascension's $429 million operating loss in the same time last year.
- However, large investment returns drove Ascension to an income of $957 million in the quarter, compared to a whopping net loss of $2.7 billion at the same time last year.
Like all hospital operators, Ascension has experienced significant volatility over the past year as COVID-19 caused widespread cancellations and deferrals of lucrative non-emergent services, along with consumer hesitation to seek out medical care. Despite growing vaccination rates and waning COVID-19 cases nationwide, the pandemic continued to drag on volumes in the first few months of 2021, Ascension management said.
The system reported a net loss of $1 billion for its 2020 fiscal year, though cost controls and congressional relief funding helped push Ascension back toward profitability in its previous financial filing in November.
Overall, Ascension — the second-largest hospital operator in the U.S., with more than 2,600 sites of care, including 146 hospitals in 19 states and Washington, D.C. — calculates it has lost $1.9 billion in revenue and expenses so far because of the pandemic.
And "healthcare hesitation continues to impact Ascension's markets to varying degrees, as the System's operations and volumes remain below pre-pandemic levels for the nine months ended March 31, 2021," Ascension said in its filing.
For those nine months, the nonprofit's equivalent discharges, admissions, emergency room visits and outpatient visits were down year over year by 10%, 9%, 21% and 6%, respectively. However, physician office visits and outpatient visits, including surgeries, exceeded pre-pandemic volumes, while virtual visits skyrocketed as more consumers took advantage of digitally delivered care in the safety of their homes.
Despite repressed volumes, higher patient acuity (including COVID-19-positive patients) and a longer average length of stay in the quarter helped bump up Ascension's net patient service revenue, driving the operational revenue growth. Net patient service revenue was $6 billion in the quarter, up 5% year over year.
Ambulatory care revenue jumped 10% to $2.4 billion and physician practice revenue grew 5% to $688 million, while inpatient care ticked up 3% to $2.9 billion.
However, revenue from long-term care plummeted 26% year over year to $97 million. Ascension did not respond to a request for comment on the reason behind the sharp drop.
Ascension also benefited heavily in the quarter from provider relief funds allocated by the Coronavirus Aid, Relief, and Economic Security Act passed in March last year. The system recognized $110 million in grants as revenue in the quarter, and has received $1.8 billion overall.
As smaller, more regional players struggle with many forced to close their doors during COVID-19, large nonprofit and for-profit operators have received scrutiny for raking in billions in federal funds during the pandemic, as many sit on massive cash reserves. As a result, a handful of systems have either returned a portion of their grants or pledged to do so, including for-profit giants HCA Healthcare and Universal Health Services, integrated nonprofit Kaiser Permanente and academic medical center Mayo Clinic.
However, Ascension has held onto its allocation, even as operational performances stabilize and investment returns soar. The system, which operates a venture capital fund and an investment advisory firm, brought in $1.1 million in investments in the quarter, contributing to a significant rise in liquidity.
Currently, Ascension has 330 days of cash on hand, compared to 284 in June of last year.