CommonSpirit Health cut its operating losses by nearly $400 million and notched a bottom-line gain of about half a billion dollars during its fiscal year ended June 30, the Catholic giant reported Thursday.
The numbers—all of which are adjusted downward to normalize for net income received through the California Provider Fee Program—reflect an uptick in patient volumes, checked labor costs and shorter stays due to tighter discharges to post-acute settings, the nonprofit said.
“While we are encouraged by the improvement in our finances for fiscal year 2024, we know there is more work to be done to accelerate this trajectory,” CommonSpirit Chief Financial Officer Dan Morissette said in a statement. “We have focused on operational excellence and strategic growth, and we will continue to lean into these areas as we work to expand on these successes.”
CommonSpirit’s most recent fiscal year ended with an $875 million operating loss (-2.4% operating margin) and $503 million excess of revenues over expenses. The prior year had seen a $1.2 billion operating loss (-3.6% operating margin) and an $82 million net loss.
Total operating revenues across the 137-hospital system rose 8.2% year over year to nearly $37 billion, while total operating expenses grew 7% to $37.8 billion.
Volumes played a key role in the former, with growth in acute admissions of 6.4%, adjusted admissions of 6.6%, outpatient visits of 6.9% and emergency department visits at 4%. On a same-store basis, the increases were 5.3% for acute admissions, 5.2% for adjusted admissions, 6.9% for outpatient visits and 2.5% for emergency department visits.
CommonSpirit outlined a “slightly improved” payer mix in which Medicaid made up a reduced percentage of gross revenue—though it also pointed to overall reduced acuity and “continued challenges with payers on denials and timely payment” as checks on the revenue growth.
“The major headwinds that the organization continues to face are limited increases in revenue levels and ensuring the organization receives the revenue and cash flow it’s entitled to for services provided given the continued inflationary pressures on salary and other costs,” management wrote in the consolidated financial statements filing.
Despite those rising cost pressures, CommonSpirit was able to make some ground on its expenses. The jump in volumes and “continued salary inflation costs” pushed spending higher, though a wave of layoffs and cost reduction efforts related to supplies spending helped moderate growth.
Additionally, management highlighted a 3.2% reduction in same-store average acute length of stay, “primarily due to length of stay reduction efforts focusing on timely discharge of patients to the home and partnering with post-acute providers to facilitate discharges.”
Nonoperating income rose by $244 million year over year to nearly $1.4 billion, largely reflecting stronger net investment income.
CommonSpirit noted in its filing that interruptions in revenue cycle and cash flows stemming from the Change Healthcare cyberattack were not material to the year’s financial performance.
Beyond its finances, the health system’s announcement highlighted strategic efforts such as patient connection centers that were “a key driver of volume growth” and the early stages of a consumer-facing overhaul of its website that includes online scheduling.
The system also pointed to nearly 60 outpatient sites it added through the fiscal year as well as quality-focused initiatives around sepsis, chronic condition management and annual wellness visits.
“We've made significant strides in improving efficiency, expanding our reach and enhancing the care we provide to our communities,” Morissette said. “It is clear that serving others and improving our patients' health outcomes and experience also improves CommonSpirit's financial health.”