CommonSpirit Health is the latest nonprofit to be hit by the ongoing financial ramifications of inflation and labor shortages.
The Chicago-based health system on Tuesday reported a net loss of $397 million for the first quarter of fiscal 2023, compared with a profit of $269 million a year ago. Operating revenue came in at $9.01 billion for the quarter, up 5.4% year over year. Operating expenses increased 5.6% to $8.99 billion. These results are not normalized for income associated with California’s Provider Fee program, a policy designed to assist hospitals that treat Medicaid enrollees and uninsured patients. .
Wage and benefits costs rose 5.1% from a year ago, and contract labor, overtime and premiums contributed to the quarter’s gains. However, the system says it has reduced contract labor costs by 43% since March. Supply costs decreased by 4.6%, while purchasing service costs increased by 13.4%.
CommonSpirit also overcame a $517 million net loss on investments for the quarter.
On September 1, Trinity Health in Michigan acquired full ownership of Iowa-based MercyOne for $613 million, a health system co-owned with CommonSpirit. The system reported a net loss of $34 million in that sale in September.
In October, CommonSpirit issued two bonds to raise approximately $1.5 billion to refinance prior debt, repay prior capital expenditures, and fund general public purposes. company. Lisa Zuckerman, senior vice president of treasury and strategic investment, said the system then likes to enter the bond market every 1 to 3 years.
