Ascension Health took a financial hit in the first three months of 2022 as workforce shortages and wage inflation drove up expenses during the height of the latest COVID-19 surge.
Ascension posted a net loss of $884 million for the three months ending March 31. A year earlier, the 142-hospital health system posted net income of $957.32 million. For the first nine months ended March 31, Ascension reported net income of $145.21 million, compared to $4.77 billion in the same period a year earlier.
The health system reported operating revenue of $6.69 billion in the first three months of this year, up from $6.56 billion in the same period of 2021.
COVID-19 cases peaked during this past quarter and, coupled with historic levels of staff furloughs, rising labor costs, ongoing workforce shortages and sporadic closures of surgical and procedural areas, combined to result in a very challenging quarter for financial performance, health system management noted in its filings.
Recurrent surges of COVID-19 cases during the first three months of 2022 "continued to have an impact on Ascension's volumes and contributed to unprecedented operational and financial challenges," health system management wrote.
COVID-related restrictions and surges also resulted in the cancellation and deferral of elective procedures at certain times in almost all markets, the health system reported.
Ascension's volumes remain below levels at the onset of the pandemic except for physician office and clinic visits.
During the first quarter, the organization had recognized roughly $311 million in COVID-19 funding revenue, “a significant decrease from the $889 million recognized during the same nine months of the prior fiscal year,” they wrote.
Similar to recent financial reports from other systems, the hospital system outlined gains in patient service revenue offset by greater operating expenses associated with higher supply and contract labor expenses.
The quarter’s $6.1 billion in net patient service revenue came in higher than the previous year’s $6 billion, with nine-month numbers for the respective years landing at $19 billion and $18 billion, according to the system’s report.
Total operating expenses, meanwhile, grew year over year from $6.6 billion to $7.3 billion for the quarter and from $19.8 billion to $21.5 billion over the past nine months, according to the filing.
Ascension saw its operating margin drop to -3.1% during the nine months ending March 31 due to persistent COVID-19 disruptions, rising costs and diminishing federal relief funding.
Management highlighted that the health system experienced a 7.6% (7.4% same facility) increase in cost per equivalent discharge during the nine months ended March 31, 2022, primarily due to increases in labor costs impacted by the pandemic. The treatment of COVID-positive patients through the recent surges led to an increase in the average length of stay, along with increased caregiver compensation and supply costs.
Total salaries, wages and benefits increased $994 million, or 10.1%, for the nine months ended March 31, 2022, compared to the same period in the prior year. The use of contract and premium labor and market wage adjustments, along with critical care bonuses, drove up these expenses, management noted.
Year-to-date equivalent discharges grew 2.7% year over year while total admissions were up 0.8%, emergency room visits were up 16.7%, physician office and clinic visits were up 4.7% and urgent care visits were up 45.6%.
Additionally, elective procedures and surgeries for the quarter were hit by COVID-19 disruptions, leading same facility inpatient and outpatient surgery visit volumes to decline 0.8% compared to the same period a year ago.
Ascension has $22.1 billion in unrestricted cash and investments as of March 31, as well as 295 days of cash on hand. It provided $1.7 billion in care of persons living in poverty and community benefit during the past nine months.
Ascension’s roughly 2,600 sites of care are spread across 19 states and the District of Columbia. Alongside its 40 senior living facilities and 142 hospitals (down from 146 hospitals at fiscal year-end), the nonprofit employed about 142,000 staff and had 40,000 aligned providers.