Sutter Health suffered a massive operating loss of $168 million in April as the COVID-19 pandemic has upended the system's finances.
The Northern California hospital system said in a notice to bondholders Thursday that the agency has seen sharp drops in patient volume due to the pandemic. Sutter has also had to make $39 million in supply chain commitments, including $24 million for personal protective equipment (PPE) and $4 million for ventilators.
“Given the evolving nature of the COVID-19 crisis, and the uncertainty of its duration and severity, Sutter cannot fully determine the cumulative impact of the crisis on the Obligated Group’s financial condition and operations,” the system said.
Sutter said that for the month of April the system suffered an operating loss of $360 million. However, after taking into account money from the federal government in the provider relief fund, that figure shrinks to $168 million.
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The system’s year-to-date operating loss as of April 30 was $404 million.
Things also aren’t expected to get better in the coming months, as the system predicts losses of $300 million per month.
“While Sutter’s liquidity remains sufficient, its future liquidity needs may change as the pandemic and economic outlook evolves,” the notice said.
At the end of 2019, Sutter had about $6 billion in unrestricted cash and investments.
But Sutter has lost more than $500 million in its investments due to the “economic volatility and uncertainty” due to COVID-19.
Sutter also noted that while it did get $1 billion from the Centers for Medicare & Medicaid Services’ Accelerated and Advance Payment Program, that funding will be repaid within a year.
The system hasn’t just had to shell out $39 million to get vital supplies for treating COVID-19. Sutter has paid $8 million in information technology updates to accommodate a massive shift in telehealth visits and another $10 million for clinical equipment.
Like health systems across the country, Sutter has canceled elective surgical procedures that are vital to hospitals’ bottom line. They also saw a major decline in patient volumes heading to the hospital.
From March 17 to April 30, inpatient bed days from the system’s hospitals declined 23%.
The decline was even worse for Sutter’s ambulatory facilities, which saw a more than 60% decline over the same period.
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More than 5,000 employees have either seen their hours cut or reassigned and retrained due to the pandemic.
Health systems such as Detroit Medical Center and Boston Medical have been forced to furlough workers.
Sutter, like other health systems, is looking at resuming nonemergency care services and elective procedures. But the system cautioned that the resumption of such services is dependent on several external factors outside of Sutter’s control, such as the availability of PPE and COVID-19 testing kits.
California also has not seen the sustained 14-day decline of COVID-19 cases federal guidelines suggest is needed to ease stay-at-home orders.
Sutter is also preparing for a potential second surge of the virus in the fall, including the purchase of additional ventilators, PPE and testing kits.
“COVID-19 is upending the healthcare delivery system on global, federal, state and local levels,” the notice said.