Providence posts $94M loss in first half as higher staff expenses offset increases in volume

A COVID-19 patient is pushed in a wheelchair by a Providence clinician after recovering from the virus
Providence Health has faced higher expenses in the first half of the year, especially for temporary staff. (Providence)

Higher expenses for temporary staffing and other areas contributed to a $94 million net loss for Providence Health in the first half of the year, but the system did post higher outpatient and inpatient admissions.

Providence posted operating revenues of $13.4 billion, which was up 7% compared to the same period in 2020. However, their operating expenses were up to $13.5 billion, a 6% boost from the previous year.

The 52-hospital not-for-profit system’s $94 million loss in the first half was much less compared to the $221 million for the first half of 2020. Its earnings before interest, depreciation and amortization were $648 million for the first half compared with $448 million in 2020.

Providence saw a major rise in non-COVID-19 volumes in the second quarter of 2021, which led to a boost in volumes. But this increase came with a cost.

“The rise in non-COVID-19 volumes helped improve Providence’s operational performance for the first six months of the year, driving higher net patient service revenue,” according to a release on the earnings. “The increased volumes and acuity levels, however, also drove higher costs, including increased labor expenses due to a market-wide workforce shortage.”

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Agency staffing costs increased by 20% in the first half due to a national labor shortage.

Hospitals across the country have faced higher expenses due to the pandemic, especially as costs for temporary staff have dramatically increased. Facilities also had to pay more for personal protective equipment.

Providence saw a 16% increase in medical supply expenses for the first half but was partially offset by a 6% decrease in non-medical supply costs.

But Providence did see key increases in admissions in the second half. Net patient service revenues were $10.1 billion for the first half compared with $9 billion in the same period of 2020.

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Inpatient admissions were 226,000 in the first half compared to 220,000 in 2020. Surgery and procedure volume also increased to 334,000 compared to 267 in 2020.

Outpatient revenues have also rebounded after major declines in 2020. The system generated $1.5 billion in physician and outpatient activities compared to $1.2 billion in the same period in 2020.

However, emergency room visits were largely the same in the first half of 2021 compared to 2020. The system posted 879,000 visits in 2021 compared to 864,000 for 2020.