West Coast powerhouse hospital system Providence St. Joseph Health returned to the black in 2019 after posting a significant net shortfall in 2018.
The nonprofit Catholic system, which operates hospitals and provider organizations in Alaska, Montana, Oregon, Washington, California, New Mexico and Texas, reported a surplus of revenue over expenses of $1.36 billion in 2019, compared to a deficit of $445 million in 2018.
The 51-hospital system reported a small decline in its inpatient volume in its earnings report for the 2019 calendar year. Revenue for its Texas operations fell, attributed to the sale of FirstCare Health Plans.
The regional powerhouse came together in 2016 with the merger of Washington-based Providence and California-based St. Joseph. The company noted in its filing an attempt last year to buy Adventist Health System/West was derailed by the California Attorney General, who has been active in scrutinizing healthcare deals. Providence said in its filing both entities are evaluating alternative options.
For the year, although inpatient admissions fell slightly year over year to 507,000 from 514,000, acute patient days grew from 2.44 million to 2.46 million. There was also growth in outpatient visits of 1.4% and emergency room visits of just under 1%. Surgeries and procedures were up 1.3%.
Meanwhile, net patient revenue grew 4.7% to nearly $20 billion. Revenue from its health plans grew nearly 10% to $1.5 billion, while other revenue grew nearly 17%, to $1.25 billion. Costs attributed to restructuring were nearly identical: $162 million in 2018 versus $162 million in 2019.
Operating expenses grew from $24.3 billion in 2018 to $24.7 billion in 2019, up 2%. Although supply costs grew by 4% — including an 8% uptick in drug costs — labor productivity increased by 4%.
Though the system's net assets also increased by nearly $1.5 billion year over year, its investment in community benefit fell from the year prior amid mounting criticism of nonprofit providers' rising income. The community health benefit totaled $1.5 billion, down from $1.6 billion, a decline of 6.25%.
The system said that community benefit spending related to the unpaid costs for Medicaid patients was $816 million, compared to $927 million in 2018.
The system had a busy 2019. It was one of the founding members of generic drug company Civica Rx; launched a population health management company to provide benefits management and risk evaluation; and came under the regulatory microscope with a Department of Justice investigation in August of its subsidiary, Swedish Health Services.
"Swedish is cooperating with the Department and compiling the responsive documents," the company said in its financial statement.