California-based Sutter Health suffered an $857 million loss in the first half of the year thanks to major declines in revenue due to the COVID-19 pandemic.
Sutter reported in its latest earnings released last week that its losses did not just stem from operations but also from investments.
“The need for Sutter to adjust its entire integrated network to respond to COVID-19 has been, and continues to be, a costly and difficult endeavor,” the report said.
The system reported a $557 million decline in operating revenue for the first half, buttressed by declines in patient revenues.
Sutter experienced rapid declines in patient revenue in the first half of the year as states required the cancellation of elective procedures and patients were hesitant to come back to the hospital.
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The 24-hospital system generated $4.8 billion in net patient revenue in the first half compared with $5.6 billion during the same period in 2019.
Patient revenue from commercial plans suffered the most, generating $2.7 billion in revenue, a $543 million drop compared with the first half of 2019.
Medicare revenue also declined by $179 million in the first half.
Sutter has also faced higher operating expenses ($6.6 billion) in the first six months compared with $6.5 billion in 2019.
The system also suffered major losses from investments ($304 million). Sutter pulled its financial outlook for the rest of the year.
“Decreased operating revenues and investment losses (even if unrealized) due to market volatility may adversely impact financial covenant calculations and Sutter’s economic security,” the earnings report said.
Like other health systems, Sutter Health got $400 million from a $175 billion provider relief fund passed by Congress as part of the CARES Act.
The system also got $1 billion from the Medicare Advance and Accelerated Payment program, which gave out advance Medicare payments to hospitals. Facilities have to start repaying the loans as soon as this month.
Sutter said it hopes to repay the loan within a year.
The system is the latest to post major losses due to the COVID-19 pandemic.
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Providence St. Joseph posted a $538 million loss in the first half of the year. The system reported increased costs in not just personal protective equipment but also staffing to combat surges of the COVID-19 pandemic.
Larger hospital systems such as HCA and Universal Health Services, on the other hand, have posted profits in their second-quarter results.
The latest statements come as hospital groups continue to press Congress for more relief funding, but talks on a new relief package have stalled.