Advocate Aurora Health triples net income to $1.85B in 2021

Advocate Aurora Health wrapped up its bounce-back year with higher operating income, patient service revenue, expenses and investment income, culminating in a 2021 net income of $1.85 billion—more than triple the $558 million it had posted in 2020.

Each of these increases was attributed to the diminishing impact of the COVID-19 pandemic, which had inflicted “a significant negative impact” on the nonprofit through much of 2020, Advocate Aurora’s management wrote in financial filings published this week.

Year over year, the system saw its operating income before nonrecurring expenses rise from $329 million to $631 million, as well as a corresponding operating margin increase from 2.5% to 4.5%.

Total revenue for the year grew 7.1% ($930 million) to almost $14.1 billion, while patient service revenue gained by 14.5% to $11.7 billion thanks to fewer care deferrals in 2021, the system wrote. Capitation revenue also rose 6.7% to almost $1.2 billion despite a 0.9% decline in capitated lives.

The system did see a 35.2% year-over-year decline in other operating revenue due to the reduction in government Provider Relief grants. Advocate Aurora had received $787 million in emergency relief during 2020 as opposed to just $34 million in 2021, according to the filing.

The Illinois-based provider’s revenue gains were somewhat offset by the rising expenses felt across the industry. Total expenses rose 4.9% year over year to $628 million, driven by a 3.2% year-over-year increase in salaries, wages and benefits and, more broadly, a 7.9% jump in supplies, purchased services and other expenses tied to increasing patient volumes.

Advocate Aurora’s biggest year-to-year shift came from its nonoperating income, which grew from $395 million in 2020 to $1.3 billion in 2021. Management pointed to the limited investment returns of 2020 ($653 million) and a stronger performance in 2021 ($1.4 billion) facilitated by recovering financial markets.

Advocate Aurora has dual headquarters in Milwaukee and Downers Grove, Illinois. Alongside its 24 acute care hospitals, the nonprofit also has an integrated children’s hospital, a psychiatric hospital and more than 500 other locations. The system posted $558 million in full-year earnings for 2020—less than half of the $1.4 billion it claimed during 2019.

As of Dec. 31, 2021, Advocate Aurora held $8.8 billion in total liabilities, $14.3 billion in total net assets and $704 million in cash and cash equivalents.

Advocate Aurora is exiting 2021 relatively unscathed compared to several of its fellow nonprofit systems.

Providence, for instance, more than doubled its annual operating loss during what it described as “an unprecedented year marked by three major surges in COVID-19 volumes.” Trinity Health trimmed its operating margin down to just 0.4%, while Ascension dipped even lower to 0.2%.  

On the other hand, Mayo Clinic logged a $1.2 billion profit in 2021, and Cleveland Clinic more than tripled its operating income year over year to $746 million.