- Sutter Health's financial woes continued into the first quarter, as the system undergoes a sweeping review of its finances after COVID-19's squeeze on its financial performance led to a steep 2020 operational loss.
- The dominant health system in northern California posted another operating loss of $49 million for first quarter due to added expenses over the last year amid the pandemic and unpredictable patient volume.
- The system said it's taking action to close its financial gap. However, Sutter also warned its goal "to break even by year end is ambitious," according to a statement released Monday.
The quarterly results come on the heels of a series of downgrades from two separate rating agencies.
The COVID-19 pandemic has only exacerbated existing operating issues, Standard and Poor's said in its analysis. Ameliorating those "will likely take a couple of years to fully address with a sizeable and multiyear turnaround," S&P said.
Sutter has previously acknowledged this fact, and said itself that it will take "several years to fully recover." Sutter announced in early March that it was engaging in restructuring plans, which may result in closing some programs and services that attract fewer patients.
This week Sutter executives said they are "evaluating every aspect" of the business as it looks to make a turnaround.
"Sutter’s efforts to address our affordability challenges started well before the pandemic, but the current global health crisis has further heightened the situation and the urgency to address it," Sutter CFO Brian Dean said in a statement.
Sutter also pointed to high labor costs as a significant factor for its growing expenses. Total operating expenses increased 2% from the prior-year period. Half of that increase was attributable to salaries and employee benefits and increased pension costs and state mandated paid time-off costs due to COVID-19.
As COVID-19 cases fall and vaccination rates rise, the nation's hospital sector is recovering though to varying degrees.
Providence, one of the nation's largest health systems, also reported an operating loss in the first quarter of 2021 as the peak of COVID-19 cases hit in early January, forcing it to delay non-emergency care. That move resulted in lower volume, lost revenue and fueled the ultimate operating loss.
Yet, Midwestern health giant Advocate Aurora was able to post an operating profit despite the dynamics of the first quarter.
Both Providence and Advocate Aurora said they are beginning see signs of a return to normal.