Ascension closed out its 2023 fiscal year with a $2.66 billion net loss, according to financial disclosures for the period ended June 30.
The St. Louis-based nonprofit health system’s tough year, which ended June 30, came from a combination of high expenses, “sustained revenue challenges” and a one-time noncash impairment loss of almost $1.5 billion, management wrote in the filing.
Ascension’s operating loss for the year came in at $3.04 billion, or $1.55 billion (-5.6% margin) without the impairment losses.
The numbers follow what was a difficult fiscal 2022, in which Ascension logged an $879 million operating loss and a $1.84 billion net loss.
“While the system continues to see measured improvement in volumes across both inpatient and outpatient settings, the reduction in COVID-19 funding negatively impacted revenue in the current year,” management wrote in the filing. “Additionally, challenges to expenses continue to persist resulting from the inflationary environment.”
Overall volumes, as measured by equivalent discharges, rose 2.3% year over year thanks to increases in inpatient surgery visits (1.5%), outpatient surgery visits (4.3%) and emergency room visits (2.7%). Full-year inpatient admissions dropped by 1.4%, which the system attributed in part to fewer COVID-19 patients. Volumes during the year’s final three months also grew year over year and compared to the immediately preceding quarter, the system said.
The volumes helped Ascension log moderate year-over-year net patient service revenue increases—1.8% overall and 2.1% on a same-facility basis. Management said the revenues were somewhat hit by a slight shift in payer mix toward government payers, an acute case mix index dip from fewer COVID-19 patients and the increase in outpatient volumes, and commercial rates that “have not kept pace with inflation.”
Operating expenses, meanwhile, rose 4.1% year over year and would have been greater if not for cost containment measures implemented across the system, management continued.
Cost per equivalent discharge rose 1.7% year over year. Total salaries, wages and benefits dropped by 1.3% despite hourly wage increases due to lower contract labor costs and the outsourcing of lab services from the second quarter onward. The latter decision also drove a 2% decrease in supply expenses but a 15.7% increase in purchased services spending.
As in the prior quarter, the substantial impairment losses reflect Ascension’s determination that “the carrying value of certain assets” within “a few” of Ascension’s markets may not be fully recoverable, a reality that the system attributed to “the ongoing industry-wide challenges impacting healthcare providers.”
The tough bottom line was somewhat cushioned by Ascension’s investment subsidiary. The unit logged $422.8 million of net investment return across the fiscal year that helped propel total nonoperating gains to $506.1 million.
Compared to the end of fiscal 2022, Ascension’s days of cash on hand dropped from 259 to 211. The nonprofit system’s spending on care for persons living in poverty and other community benefit programs also fell from $2.25 billion in fiscal 2022 (7.8% of total operating expense) to $2.18 billion (7.3%).
“The American healthcare system is experiencing unprecedented operational and financial challenges, and Ascension is no exception to these larger trends,” Liz Foshage, executive vice president and chief financial officer at Ascension, said in a release. “The aftereffects of the COVID-19 pandemic, continued healthcare worker staffing shortages, ongoing supply chain challenges and persistent inflation were headwinds we faced throughout the last fiscal year.
“As we look forward to the next fiscal year many of these headwinds remain, but our team is prepared to adapt to this new normal and chart a path back to operational stability,” Foshage said.
Ascension is among the country’s largest health systems with 140 hospitals and 40 senior living facilities. The Catholic giant employs roughly 134,000 people across 19 states and the District of Columbia and reported $28 billion in total revenue during its 2022 fiscal year.
Higher volumes and expenses have been a recurring takeaway in other nonprofit systems’ recent quarterly financial statements. Providence, a fellow Catholic nonprofit aiming to dig its way out of last year’s losses, reported last month that it had managed to trim its six-month operating losses from $424 million to $202 million thanks to returning patients and operational restructuring.