Providence posts $538M loss in the first half of the year due to COVID-19

photo showing exterior of Providence St. Joseph Health hospital
Providence reported a $538 million loss in the first half of 2020 due to declines in volume sparked by the COVID-19 pandemic. (Providence St. Joseph Health)

Providence reported a $538 million loss for the first half of 2020 as the system fights patient volume reductions caused by the COVID-19 pandemic.

The hospital system reported on Tuesday its latest earnings release that net patient revenue declined $1.1 billion from the prior year to a total of $9.1 billion in the first half.

Patient volumes declined by 13% through the first six months, and surgeries and procedures declined by 23% compared to 2019.

“Daily volume losses troughed in April 2020 and have rebounded variably across regions and lines of business through the second quarter of 2020, as postponed elective surgeries resume, and COVID-19-related hospitalizations continue to increase,” the report said.

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Hospital operating revenues took a major hit in the first half, generating $7.5 billion in revenue compared with $8.3 billion in the first half of 2019.

Overall total operating revenues were $12.4 billion compared with $12.6 billion in 2019.

But operating expenses for the first half were $12.7 billion, an increase of 3%.

“First half results were also impacted by increases in costs to serve those impacted by the virus, including increased labor and pharmaceutical costs, as well as significant increase in both the volumes and costs of personal protective equipment (PPE) to help keep our caregivers safe,” the report said.

Providence also faced increased staffing costs to combat a surge of COVID-19 in tandem with the declines in volumes.

Health systems across the country faced similar predicaments as volumes plummeted in March and April and started to rebound in May and June.

However, some major hospital systems such as HCA Healthcare and Tenet reported profits in the second quarter thanks to relief funding passed by Congress.

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Providence also reported that it got $827 million from a $175 billion provider relief fund created by the CARES Act. It also reported another $1.6 billion in loans under the Medicare Accelerated and Advance Payment Program.

“We have taken all prudent steps to preserve our operating performance and liquidity, including halting capital projects outside of those focused on patient and caregiver safety and COVID-19,” Providence said. “We have also reduced discretionary spending, including travel, contractors, purchased services and professional services.”

Providence also said it experienced investment losses of $212 million in the first half. The system generated $812 million in gains in comparison in 2019.

The earnings results come as the hospital lobby is pressing Congress to pass more relief funding for facilities. An estimate from the American Hospital Association projects hospitals could lose $323 billion by the end of this year.