Although Trinity Health reported greater year-over-year operating revenue growth during the fiscal quarter ended Sept. 30, it was the divestiture of a 50% stake in Gateway Health Plan that helped the nonprofit smash the prior year’s operating income and operating margin.
Closed in August, the sale to Highmark Ventures brought a $127.2 million gain to the system during the first quarter of its 2022 fiscal year, according to a recent financial filing.
This bumped Trinity’s operating income up from $106.3 million (down from $112.1 million in the first quarter of 2021) to $233.5 million as well as its operating margin from 2.1% (down from 2.3% in the first quarter of 2021) up to 4.7%. The divestiture also yielded a $62.5 million dividend distribution for the system.
The system’s total operating revenue for the quarter rose $176.7% million (3.7%) year over year to $5 billion.
Much of this was driven by increased volumes and payment rates, which the organization’s management noted were partially offset by a less favorable payer and case mix. Of note, year-over-year emergency room visits rose 9.6% during the most recent quarter, the system reported.
RELATED: Trinity Health credits payment rate increase, improved case mix for FY2021's $658M operating income
However, the faith-based nonprofit was no exception to the rising expenses facing the rest of the industry. Total operating expenses rose $182.5 (3.9%) year over year to $4.9 billion, much of which came from a $58.7 million increase in salaries and wages and a $43.6 million increase in contract labor spending.
Trinity’s management noted in the filing that COVID-19 discharges rose 29.7% during the most recent quarter in comparison to the prior year. This uptick in cases coupled with broader economic challenges is expected to have a negative impact on the system’s financials going forward, they wrote.
“The corporation’s response to the COVID-19 pandemic continues to require additional contract labor staff and increased premium labor rates,” Trinity’s management wrote in the filing. “Both labor and supply chain disruptions, including shortages, delays and significant price increases in medical supplies, pharmaceuticals, and personal protective equipment, are expected to continue to impact the corporation’s operations.”
Michigan-based Trinity Health is among the largest provider organizations in the country, with nearly 90 hospitals and other facilities spread across 25 states. As of Sept. 30, it holds total assets of $34 billion and net assets of $18.9 billion.