Providence Health & Services is still recovering after it posted multi-billion dollar revenue losses in the second quarter of 2022. Providence had previously parted ways with Southern California-based Hoag Hospital, leaving a $3.4 billion hole in its balance sheets and prompting the company to launch a series of cost-cutting initiatives.
On Monday, the non-profit health system based in Renton, Washington reported its second-quarter earnings, alerting investors to its progress. The hospital had an operating loss of $202 million — which represents a $143 million improvement from the prior quarter and a $222 million improvement from the prior year. Providence management attributed the results to rebounding patient service metrics and leadership’s continued efforts to trim costs through its recover and renew initiatives.
Providence reported a 12% increase in net patient service revenues and declining resource consumption in the first half of the year compared to the prior year period, with inpatient admissions up 2% and outpatient surgeries and procedures up 17%.
However, Providence’s expenses also continued to rise in the second quarter. Operating expenses increased 7% in the first six months of the year compared with the same period in 2022. Pharmaceutical and total supply expenses both rose 10% and salary and benefit expenses increased by 5% during the first half of the year.
CFO Greg Hoffman acknowledged the external pressures that plagued the health system last year — including inflation, staffing shortages and delays in reimbursement — have continued into 2023. However, he noted that Providence’s financials are improving.
“We continue to stay the course on our strategies for recovery and renewal. These efforts are making an important difference,” Hoffman said in a statement.
Providence’s broad recovery, called Destination Health 2025, began rolling out last year. The plan to improve operational efficiency included consolidating the executive leadership team through a reduction in force from seven divisions to three and renegotiating payment rates with commercial insurers.
This year, the system has focused on retention and recruitment in efforts to reduce reliance on agency staffing, management said in the earnings statement. Providence is also seeking partnerships with community-based post-acute facilities to streamline the discharge process and further reduce patient days.